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Are grants taxable income to the receipient?

by TrojanMBA, Window Shopper

  • Created: May 3, 2010, 3:03 pm
  • Updated: October 26, 2012, 12:43 pm
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8 comments

If my small business receive a grant from a the government or a charitable organization are the grant proceeds taxable?

Tags: Discuss Popular Topics, Filing and Paying Taxes
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MarkAcantilado | Window Shopper | 8/13/2012 - 7:04 am

Yes - as it may be considered as an income to your business which may make it
taxable.
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giuliams | Window Shopper | 4/3/2012 - 11:51 am

The government does in fact provide grants for small businesses for research
and development projects. You can read more about it here:

http://www.sba.gov/content/research-grants-small-businesses

Though this article dot not cover whether the grants are considered taxable
income.

BizResearcher | Window Shopper | 5/23/2012 - 12:01 pm

Show Replied Text…
The government does in fact provide grants for small businesses for research and development projects. You can read more about it here: http://www.sba.gov/content/research-grants-small-businesses Though this article dot not cover whether the grants are considered taxable income.
The government does indeed provide grants for a limited number of highly
competitive projects. I co-wrote a successful grant for the innovative use of
natural resources and I have collaborated on SBIR (Small Business Innovation
Research) grant applications. The requirements are stringent, but the rewards
can be great for the few businesses that can qualify.

alfredlive | Creator | 7/26/2010 - 7:34 am

Application on which the IRS has ruled favorably must be made publicly available by the organization and the IRS (for post 1987 filings). Copies of the three most recent returns, except for the 990-T, must be provided by the filing organization upon request.
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burtondds | Creator | 5/28/2010 - 5:01 pm

This can be very confusing, but like what was said before, a small business cannot get a grant from the government.  There are other organizations that are available to help small businesses.  You just have to find them.  Back to the question about is a grant taxable.  You would need to check with the IRS.gov and read over the publication 578, Tax informaiton for Private Foundations.

OrganicGirl | Window Shopper | 7/31/2010 - 1:54 pm

Anytime dealing with taxes it is always best to go over it with your accountant. Because it can get really confusing and the laws change from time to time.

NRiddle | Contributor | 5/3/2010 - 3:03 pm

First, the US goverment doesn't give grants to small businesses; they only guarentee loans through programs such as the SBA. Second, a charitable organizations rarely give grants to small businesses for start-up. Sadly there is no cut or dry answer to this question. From IRS.gov, various answers can be attained. For example from the Publication 578, Tax Information for Private Foundations and Foundation Managers, p.18 (http://www.irs.gov/charities/foundations/article/0,,id=137396,00.html), grants to individuals for travel, study, or other similar purposes (including loans made for charitable purposes, and program-related investments) are taxable expenditures, unless the following conditions are met: 1.The grant must be awarded on an objective and nondiscriminatory basis under a procedure approved in advance by the Service, and 2.It must be shown to the satisfaction of the Service that one of the following requirements is met-- a. The grant is a scholarship or fellowship and is to be used for study at an educational institution that normally maintains a regular faculty and curriculum and normally has a regularly organized body of students in attendance at the place where the educational activities are carried on. b. The grant qualifies as a prize or award under Internal Revenue Code section 74(b),
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ForeclosedHomes | Window Shopper | 5/3/2010 - 3:03 pm

Show Replied Text…
First, the US goverment doesn't give grants to small businesses; they only guarentee loans through programs such as the SBA. Second, a charitable organizations rarely give grants to small businesses for start-up. Sadly there is no cut or dry answer to this question. From IRS.gov, various answers can be attained. For example from the Publication 578, Tax Information for Private Foundations and Foundation Managers, p.18 (http://www.irs.gov/charities/foundations/article/0,,id=137396,00.html), grants to individuals for travel, study, or other similar purposes (including loans made for charitable purposes, and program-related investments) are taxable expenditures, unless the following conditions are met: 1.The grant must be awarded on an objective and nondiscriminatory basis under a procedure approved in advance by the Service, and 2.It must be shown to the satisfaction of the Service that one of the following requirements is met-- a. The grant is a scholarship or fellowship and is to be used for study at an educational institution that normally maintains a regular faculty and curriculum and normally has a regularly organized body of students in attendance at the place where the educational activities are carried on. b. The grant qualifies as a prize or award under Internal Revenue Code section 74(b),
if you were to get a grant, i would expect it would be considered taxable. In the same vein of the post above, income can come in many forms - for example a written off debt can be considered income, a grant would appear to be similar, a loan which is automatically forgiven.
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