Tax implication of a proposed discount to members at museum store

Carrie Santoro

First time to use this community to problem solve but if anyone can provide info on this, I'd be very appreciate. I'm the Controller at a university system foundation, and we have a museum on one of our campuses. I've got a question related to museum membership.  Years back, the museum gave museum members a discount on purchases in the museum store. Now when you become a member of the museum, a part of your membership is considered a gift. The payment split between membership and gift is set and identifiable. The idea of a 10 percent discount for members (who all have contributed a gift as part of their membership payment) was brought up recently for discussion.  I'm wondering about any potential tax implications for museum members.  This would be a membership benefit, but impossible to predict. From the members point of view, would they incur a tax implication? Would the museum? The Foundation? Oh, and BTW, I've only been at the Foundation for six months, and while I have years of accounting experience, I've never worked in the non-profit world before. Obviously, your insight would be so valuable to me!

Daniel Weaver

I don't see how a discounted purchase would create any tax implications at all for any party, aside from just a proportionally lower sales tax collected on the lower sales price. If you were giving the member something free in exchange for a donation, then there could be issues, but in this case, they only get a discount if they buy something for (presumably) still above your cost. I don't get taxed if I use my Costco membership to buy something on sale, so similarly, there shouldn't be any tax implications for a museum member taking advantage of what is essentially a sale price in the museum store.