QUESTION

If I solicit sponsors for an event, the primary purpose of which is product sales, can I legally offer a % of sales to sponsors without law violation?

Asked on May 26th, 2016 on Business Law - New York
More details to this question:
This will be a new product launch at different venues around the country. Many businesses and individual consumers will have interest in viewing and buying. These would be high ticket items. The strategy is to have sponsors come aboard to help defray costs of events, advertise, etc. They would also be pledged a percentage of profits in exchange for sponsorship. That is where the questions comes in of acceptability under state and fed laws. Does anyone have information about offering a percentage of profits to sponsors? No equity is being offered to the sponsors, but would offering a percentage of profits fall under securities laws? What are the legal ramifications, if any, for offering percentage of profits to event sponsors? Thanks for any information and legal opinions.
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1 ANSWER

Estate Planning Attorney serving New York, NY
1 Award
There is no problem with this as long as the transactions are reported to the IRS with a 1099 form.
Answered on May 28th, 2016 at 7:50 AM

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