Rob Ford Crack Video: Give the Money Back, Gawker! Where’s my Canadian Tax Deduction?

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There is allegedly a video out there
showing Toronto mayor Rob Ford
smoking crack cocaine. 

Unless you’ve been completely isolated over the past week, you know that both the Toronto Star and the media news and gossip site Gawker have reported that they have seen a portion of a video that allegedly shows Toronto mayor Rob Ford smoking crack cocaine.

You also know that the owners of this video have requested $200,000 in return for a copy of the entire video and that Gawker has been using the crowdfunding website Indiegogo.com to solicit donations from the public for their own “Crackstarter Campaign” in an effort to raise the funds to buy the video and publish it for all to see.

However, on Thursday, May 24, 2013, at 6:10 p.m. EST, Gawker editor John Cook posted that the site’s plan to obtain the video had hit a snag: the people who owned the video had apparently gone off the grid.

“The last time we established contact with the people who are in possession of the video was this past Sunday, and we have not been able to reach them since,” he wrote, mentioning that though they had been in constant contact with the tipster who initially connected them with the owner of the video, the tipster had been unable to get a hold of the video’s owner in recent days.

In the same post, Cook outlined Gawker’s plan if the $200,000 campaign is funded before the deadline but they still cannot track down the video to purchase it.

“If we end up meeting that goal and fail to consummate this transaction, we will—as we promised at the outset—donate the proceeds to a Canadian nonprofit that addresses substance abuse issues. We haven’t figured out which one yet, but I’m sure we’ll be able to select a worthy one.”

The possibility that they may lose contact with the owner of the video (on account of the obvious unreliability of drug dealers) was an outcome Gawker outlined from the outset of the campaign — even before they eventually did lose contact with them — and donating the funds to a Canadian non-profit was always the fallback plan. But, if they do end up donating the funds to a Canadian substance abuse charity, who receives the tax deduction, Gawker or the people who funded the campaign? And would a tax receipt even have to be produced?

We asked Michael Storoszko, the principle accountant at Toronto’s Storoszko & Associates, for the answer.

“The charity that receives the donation must be Canadian and it would be up to them to issue the tax receipts to the individuals,” says Storoszko. He adds that if the charity decides to issue tax receipts, Gawker would need to provide the name and address of every donor and the amount that each of them donated.

Since the contract between Gawker and the donors was originally for Gawker to act as an intermediary in a buy/sell agreement to purchase the tape, unless the charity decides to issue tax receipts, there will be nothing for the donors.

“If the donors request a tax receipt, ethically, Gawker should inform the charity,” says Storoszko. “But to be fair, Gawker should refund the money to the donors, as they did not complete the transaction they intended to do.”

For the record, the donors have a right to ask for their money to be refunded since the original intention of the deal would have fallen through. However, since Gawker is a U.S. company, Storoszko says there is nothing legally in Canada to stop them from doing whatever they wish with the money. However, if the donor used Paypal or a credit card to complete their transaction, those people do have the ability to get their money back.

LSM’s Take on the Rob Ford Crackster Fund: It seems morally wrong to arbitrarily donate someone’s money to a charity of Gawker’s choice, when the original intention was to use that money to help purchase a video, especially when you don’t know if the funders are the giving type or would support such a donation. What Gawker really should be doing is giving the money back to the backers if the video cannot be purchased. If Gawker’s motivations are truly altruistic, why not match the contributions of its pledgers in the form of a charitable donation themselves? If the $200,000 target is not hit before the deadline, why not refund the money to the pledgers and still match them dollar for dollar in the form of a charitable donation? This would be a real show of good will and everyone would go home at the same point they were at when this proposed fund began.

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  • William Shung
    July 9, 2013 at 6:38 am

    Monty,
    My comment of May 30th confirms your point. Despite all the negative news the media put out. The latest poll shows Ford’s popularity on the rise. If there is an election today he would still win.

    • LSM Insurance
      July 9, 2013 at 9:11 am

      Certain media outlets not mentioning names seem to have a strong bias against Ford.

  • Monty
    July 8, 2013 at 2:36 am

    It looks like the whole thing was a hoax made up by the media.

  • undiluted truth
    June 4, 2013 at 10:55 pm

    So you idiots give gawker your money to give to a drug dealer and you are surprised that you didn’t get what you paid for? hahahahahahahaha

    I bet Mayor Ford and the drug dealers are splitting the money 50/50 right now & laughing at how easy it was to get $200,000 without having to work for it. And you can thank Gawker for it! GO GAWKER! LOL LOL LAWL LAWL

  • William Shung
    May 30, 2013 at 1:29 pm

    Many things are wrong here. According to the law, a person is not guilty until proved guilty. So far there is no proof that he has done anything wrong. He never cooperated with the media so the media hate him and taking every opportunity to attack him. The media have a strong influence on people leading to a series of accusations to the extent of asking for his removal from office. His best option is to say as little as possible. What else can he do?

  • aaronb
    May 28, 2013 at 5:30 pm

    Gawker editor, John Cook has issued a thank you after the Crackstarter has reached its goal.

    http://gawker.com/thank-you-the-rob-ford-crackstarter-has-met-its-goal-510094141

  • Storoszko & Associates, Tax Professionals
    May 28, 2013 at 11:51 am

    Hi Chris,

    It’s not that simple nor the point…

    Gawker is US based, they cannot declare the income and write off the donation with a zero tax effect… they would be required to pay tax on the income net of the allowable deduction – why pay tax?

    The point of the article is that it’s unfair to those that contributed to not receive the tax deduction for their contribution.

  • chris
    May 28, 2013 at 11:29 am

    It’s actually pretty simple. Gawker can declare the 200k as income, and claim the deduction. Or they can simply funnel the money into the charity, and no one gets the deduction.

    The first option will not be used as the tax payable on the income will be higher than the credit from the deduction.

  • LSM Insurance
    May 28, 2013 at 8:55 am

    The Crackster Fund hit its goal collecting $201,254 http://www.indiegogo.com/projects/rob-ford-crackstarter.

    Still no word on if any of the Pledgers will receive a charitable donation.

  • Alison
    May 27, 2013 at 4:31 pm

    Gawker did it…exceeded their goal of $200k! Now what? Ford’s administration is crumbling before our eyes. If he really did smoke crack cocaine then his refusal to acknowledge this abuses the office of mayor, the city of Toronto and its citizens. As well, even if he isn’t a drug user shouldn’t he be held accountable as to why he can’t hold his administration together?

  • Chris
    May 27, 2013 at 2:52 pm

    If an American magazine gets online donations, what percentage would be from Canadians? Unless it’s 100%, why would they be motivated to donate it to a Canadian charity? And even if it was 100%, would they admit to that? How would we ever find out?

    • LSM Insurance
      May 27, 2013 at 3:05 pm

      Good point! But Gawker has said they will donate the money to a Canadian charity.

  • Joyce
    May 27, 2013 at 8:44 am

    It looks like they may not hit the $200,000. Less than 24 hours to go.

    • LSM Insurance
      May 27, 2013 at 8:50 am

      Joyce, the amount o pledges has definitely decreased in the last 48 hours it will be very tight.

  • Trader
    May 26, 2013 at 8:52 pm

    What is wrong with Gawker get free promotion it was there idea. Sounds like sour grapes

    • LSM Insurance
      May 26, 2013 at 9:00 pm

      No doubt. The Crackstarter Fund was Gawkers idea and they have every right to profit from the publicity.

      But it would be nice if they were a little mopre transparent about their intentions.

  • Insurance__Now
    May 26, 2013 at 1:52 pm

    I have not seen this covered in any major Toronto media outlet or by Gawker even though its all tied into the recent Ford scandal. The most interesting part is that the money must go to a Canadian charity and if so, “Gawker would need to provide the name and address of every donor and the amount that each of them donated.”

  • Jay P
    May 26, 2013 at 1:03 pm

    You would have to be on crack to give money to to these guys. Let me see I go to work and give money to some low life so he can try and sell drugs to my kid. Makes perfect sense.