Where did you get the taxable income thing from? The FAA simply states, "Compensation".
From the FAA FAQs:
What is the definition of recreational or hobby use of a UAS or drone?
Recreational or hobby UAS or drone use is
flying for enjoyment and not for work, business purposes, or for compensation or hire.
In theory, your local hobby shop gives you an engine in return for you displaying their name on your plane. You have been "Compensated" by any definition in the tax code and business law. In theory you take a picture with your drone and give it to your neighbor and they give you a beer for your effort, YOU have been Compensated.
Now, imagine you use an OS engine you paid for. And you stick one of their OS stickers on your plane next to the engine. FAA pays a visit to a contest and asks for your 107 cert. You don't have one. But he says, you have a sponsor. That OS sticker proves it. But 'NO' you say. They didn't pay you anything. "Prove it!"
It is, as the Brits might say, a Sticky Wicket. So let me ask this, has anyone here asked the FAA about this situation? Anyone? Beuller? Beuller?
BTW, I asked but haven't got a response yet.