If people estimate the value of the benefit provided by Facebook to be $1000, under US tax law are they required to declare that as a “gift” and pay taxes on the net $1000 of service they received for $0?
The FMV of FaceBook access is zero, as evidenced by Facebook being routinely available for free.
US tax law does not anticipate routinely taxing inchoate transfers of value caused by operating things which distribute value broadly. For example, while assigning the copyright to Harry Potter would likely be a taxable event, holding a concert in public is not, even if the concert is of sufficient quality level to charge for it. The general phrase for this is “de minimis non curat lex”; specific instantiations of this of particular note are intrafamilial payments for cleaning one’s room, which is de jure absolutely a taxable event and which de facto would result in the IRS Commissioner being asked to explain himself to Congress if it were ever enforced.
Additionally, if the IRS used people’s subjective self-assessments to value things on one side of the ledger, they’d have to do it on another side of the ledger, leading to people having the attack “be a utility monster [0]” available against tax administration.
[0] Utility monsters have implausivly large but perhaps “legitimate” weightings for things. The existence of them is problematic for systems which do cost/benefits analyses and allow agents unconstrained choice of their utility function.
> pay taxes on the net $1000 of service they received for $0?
by that logic, then breathing in clean air is gonna have to get taxed as clean air has a value that's none-zero, despite that people are paying zero for it currently.
I believe US taxes are based on market prices, not value.
It is generally impossible to guess the value of something. what is the value of a bottle of water in to the average person versus the value to a someone lost in the desert?
