So I currently own a Minecraft server that pulls in over $2k a month. On this server, users have the ability to 'donate' to keep our server running, along with allowing me to buy various new things for it.
In our Terms of Service, we specifically state that when the user donates, they are not entitled to any physical or virtual items (yet items are still given to them for donating).
Excerpt from our TOS:
"By donating you are not entitled to any physical or virtual good. A donation as defined is an act or instance of presenting something as a gift, grant, or contribution with no expectation of anything in return."
So basically we consider everything we make to be a donation towards us(towards the server upkeep itself).
So how would I handle this in terms of taxes?