Coach Salary a charitable contribution?

[eddyj]

I saw this in today's paper, and I am aghast. What kind of fucked up system do we have that would treat a luxury suite as a charitable contribution? :angry:

http://www.miami.com/mld/miamiheral...mm/16378515.htm (http://www.miami.com/mld/miamiherald/news/columnists/fred_grimm/16378515.htm)

It's the law. Spelled out in the federal tax code. Teachers throughout Alabama must be dancing in the streets, knowing that their flagship university has earmarked $32 million in salary and another $4 million in incentives (not to mention the $4 million buyout to get rid of its previous coach) toward educational purposes.

Most of Nick's salary will be funneled through the 'Bama boosters club, technically a 501c (3) charitable organization. Roll Tide boosters get to write off their contributions on their tax returns. For instance, when one of Alabama's well-to-do fans leases one of 123 skyboxes in Bryant-Denny Stadium, he's able to write off 80 percent of the $42,000 annual fee as a charitable donation. All that drinking, cheering, cussing in fancy digs -- that's as good as a writing a check to the March of Dimes.

[JPriller]

I knew Saban would head back to college ball.

Oh wait... wasn't there some other news in that article? Oh, okay... nothing surprises me about big-college athletics anymore, certainly not the funding or the spending.

[BrettStah]

501(c)3 FACT SHEET (http://www.ezec.gov/Toolbox/501c3factsheet.html)
There are 8 types of tax-exempt 501(c)3 organizations: charitable; religious; educational; scientific; literary organizations; those that test for public safety; support national and international sports competitions; and those that work to prevent cruelty to children or animals. Many community and economic development organizations have chosen to classify themselves as educational organizations. However, be aware that501(c)3 public charities are supposed to receive at least one third of their support from the general public. Some organizations find themselves relying heavily on donations from founders or board members, or going back year after year to the same foundations or corporations for income, which may not count as "public" support.

[eddyj]

I think supporting your local college football team is quite a stretch of "support national and international sports competitions". That sounds much more like donating to Olympic training centers, and such. Having a luxury box at your local stadium be a "charitable contribution" is obscene.

[BrettStah]

I think supporting your local college football team is quite a stretch of "support national and international sports competitions". That sounds much more like donating to Olympic training centers, and such. Alabama is part of the NCAA. Guess what the "N" stands for. :)
Having a luxury box at your local stadium be a "charitable contribution" is obscene.Yeah, I sort of agree, but your beef should be with the IRS (and/or the US Congress), and not with any of these college athletic foundations and their supporters, in my opinion.

[thevargasgrl]

Welcome to the South, where football is like a religion.

[Turtleboy]

It's not because it's National, it's because it's an educational institution.

[Martin Tupper]

Because if it was, everyone could write off their season tickets to the National Football League.

[eddyj]

Yeah, I sort of agree, but your beef should be with the IRS (and/or the US Congress), and not with any of these college athletic foundations and their supporters, in my opinion.

It is exactly that which upsets me the most. You should not be getting a tax break for buying luxury boxes or for paying a coach. The people that take advantage of it are not the worst offenders (although I am not too impressed with them either).

[eddyj]

It's not because it's National, it's because it's an educational institution.
Because the football coach is playing such a large part in the education of these kids. Right. :rolleyes: (The rolleyes is not for you, TB, but for the situation.)

[BrettStah]

Because if it was, everyone could write off their season tickets to the National Football League.NFL teams aren't 501(c)3 organizations.

[Martin Tupper]

NFL teams aren't 501(c)3 organizations.
No, but if the only requirement was to be a non-profit entity supporting national and international sports competitions, then non-profit "booster" clubs could be set up to resell tax-deductible season tickets.

[aindik]

Because the football coach is playing such a large part in the education of these kids. Right. :rolleyes: (The rolleyes is not for you, TB, but for the situation.)

You can donate to non-profit educational institutions for all kinds of things that aren't related to the education of anyone. You think the guy whose name is on the brand new fitness center or dorm building at (insert university here) didn't take a huge tax deduction for that?

I thought, though, that a charitable donation had to be a "donation." If you get something tangible in return for it (like a luxury suite, or food, or booze or game tickets or the labor services of an individual) you could only deduct the difference between what you paid and the fair market value of what you got. At least that's how I remember learning it.

[BrettStah]

You can donate to non-profit educational institutions for all kinds of things that aren't related to the education of anyone. You think the guy whose name is on the brand new fitness center or dorm building at (insert university here) didn't take a huge tax deduction for that?

I thought, though, that a charitable donation had to be a "donation." If you get something tangible in return for it (like a luxury suite, or food, or booze or game tickets or the labor services of an individual) you could only deduct the difference between what you paid and the fair market value of what you got. At least that's how I remember learning it.I think that may be why only a percentage of the donation is tax-deductible.

[BrettStah]

No, but if the only requirement was to be a non-profit entity supporting national and international sports competitions, then non-profit "booster" clubs could be set up to resell tax-deductible season tickets.
I actually found a different explanation of a 501(c)3 organization that includes an extra word:
501(c)(3) exemptions apply to corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition, or for the prevention of cruelty to children or animals.
Wikipedia link (http://en.wikipedia.org/wiki/501%28c%29#501.28c.29.283.29)

[aindik]

I think that may be why only a percentage of the donation is tax-deductible.

Well, then I don't think it's entirely fair to accuse people of deducting the cost of their luxury suites (assuming the subtraction they made for fair market value is reasonable). If they intentionally overpaid for the luxury suite with the intent that the overpayment benefited something that actually is a charity, I don't see an issue.

If the Red Cross buys a luxury box for an NFL game for $10,000, and then auctions it off at a charity auction for $30,000, I think the winning bidder is well within his rights to take a $20,000 deduction, despite the fact that he effectively bought a luxury suite for $30,000.

[jgickler]

I don't know how other universities structure it, but at Iowa there are two portions to the season ticket costs. The first is the actual ticket cost, which is the same regardless of where you are seated in the stadium ( not including boxes or club seats). Then on top of the ticket price, there is a minimum donation level which must be made annually to the I-club ( athletic booster organization). The better the tickets, the higher the minimum donation. My understanding is that the ticket prices are not deductable, but the donation portion of the tickets are. For single game tickets, there is no donation component.

So I would guess that it is certainly possible that a minimum donation is necessary to purchas a box, but that the actual price of the box is fixed and 20% seems reasonable.

[BrettStah]

I think that's how it is at most colleges. At LSU, you get the right to buy season tickets by first donating a set amount per-seat. But I don't think that 100% of the donation is tax-deductible (and 0% of the season ticket price is deductible).

[jgickler]

Here's the note from the Iowa websiteNote: As specified by current Internal Revenue Service (IRS) regulations, a charitable contribution that qualifies an individual to the right to purchase athletic tickets is 80 percent tax deductible. The donor is hereby advised and encouraged to consult donor's own tax advisor for applicability of the IRS regulations to the donor's specific circumstances and the availability of an income tax deduction, if any, for this gift. The UI Foundation makes no representation or warranty as to the ability of the donor to obtain an income tax deduction for this gift.