|
NIL
Jan 22, 2023 18:37:47 GMT -5
Post by ay2013 on Jan 22, 2023 18:37:47 GMT -5
It's pretty clear that a lot of NIL is purely a "legal" way for boosters to influence recruiting- In 2021, after Texas had another disappointing season and Steven Sarkisian identified the offensive line as a "key recruiting area", a "non-profit" was announced by six university alumni and supporters to give a total of up to 800k, every year, to the offensive lineman on scholarship at Texas. The announcement was made a week before early signing day, and Texas subsequently signed three top 5 national offensive line players, in the same year the program went 5-7 and failed to make a bowl game. www.chron.com/sports/college/article/University-Texas-Austin-offensive-linemen-16680150.php what's the "name, image, and likeness" value for paying walk-ons (players most have never heard of and probably never will) tuition at BYU? www.si.com/college/2021/08/12/byu-football-nil-deal-walk-on-tuition-built-barCertainly there is little to no return on investment for giving these kinds of athletes all of this money. Even for some of the actual starts of the games, some of their NIL deals are ridiculously dumb. Does the local Lamborghini dealership in Austin really think that the people that can afford their $250k+ cars actually care that some 20 year old that likely won't graduate from the school and will jump ship to the NFL at the right opportunity (which is exactly what Robinson did, even foregoing playing in this years bowl game, which Texas ended up losing) is riding them to the games? www.si.com/extra-mustard/2022/05/05/texas-running-back-bijan-robinson-nil-deal-lamborghini-austinPlayers like Logan Eggleston are probably the poster child for what NIL should be. While I think that the relatively small volleyball media world does a disservice among players and programs nationally by picking and choosing which players to focus on (and, make no mistake about it, Eggleston surely gets outsized media coverage, even when factoring in her talent), Her largest NIL deal, reportedly from Champions sports at 60k, actually is directly relevant to the sport, and, given Eggelston's popularity coupled with the actual product, probably will be an actual return on investment. Return on Investment and/or tax deductibility is starting to drive the NIL landscape. "Non-profit" NIL entities are starting to pop up because deep-pocket donors are realizing the ROI isn't real, and they at least want the ability to deduct NIL expenses from their tax liability as a charitable donation (which they can do if it goes directly to the University.) It's not clear, however, if a non-profit NIL will actually withstand IRS scrutiny. The IRS regulations which apply to a legitimate non-profit NIL are extremely narrow, and if the majority of the expenditures from such a non-profit NIL entity go to college athletes, it's likely that the IRS will disallow the tax deductibility. Because they're relatively new, it's still too soon to know how the IRS will treat these, but after a few audits, it will start to become pretty clear. One would hope that rich boosters paying college athletes to attend their alma maters shouldn't be tax deductible, but I'm not holding my breath on that one. The billions of dollars of economic activity wasted for the sole purpose of tax avoidance/evasion is mind boggling.
|
|
|
NIL
Jan 22, 2023 19:37:10 GMT -5
Post by volleyguy on Jan 22, 2023 19:37:10 GMT -5
Return on Investment and/or tax deductibility is starting to drive the NIL landscape. "Non-profit" NIL entities are starting to pop up because deep-pocket donors are realizing the ROI isn't real, and they at least want the ability to deduct NIL expenses from their tax liability as a charitable donation (which they can do if it goes directly to the University.) It's not clear, however, if a non-profit NIL will actually withstand IRS scrutiny. The IRS regulations which apply to a legitimate non-profit NIL are extremely narrow, and if the majority of the expenditures from such a non-profit NIL entity go to college athletes, it's likely that the IRS will disallow the tax deductibility. Because they're relatively new, it's still too soon to know how the IRS will treat these, but after a few audits, it will start to become pretty clear. One would hope that rich boosters paying college athletes to attend their alma maters shouldn't be tax deductible, but I'm not holding my breath on that one. The billions of dollars of economic activity wasted for the sole purpose of tax avoidance/evasion is mind boggling. That’s is the primary goal of a non-profit NIL.
|
|
|
NIL
Jan 22, 2023 19:59:30 GMT -5
Post by slxpress on Jan 22, 2023 19:59:30 GMT -5
Return on Investment and/or tax deductibility is starting to drive the NIL landscape. "Non-profit" NIL entities are starting to pop up because deep-pocket donors are realizing the ROI isn't real, and they at least want the ability to deduct NIL expenses from their tax liability as a charitable donation (which they can do if it goes directly to the University.) It's not clear, however, if a non-profit NIL will actually withstand IRS scrutiny. The IRS regulations which apply to a legitimate non-profit NIL are extremely narrow, and if the majority of the expenditures from such a non-profit NIL entity go to college athletes, it's likely that the IRS will disallow the tax deductibility. Because they're relatively new, it's still too soon to know how the IRS will treat these, but after a few audits, it will start to become pretty clear. One would hope that rich boosters paying college athletes to attend their alma maters shouldn't be tax deductible, but I'm not holding my breath on that one. The billions of dollars of economic activity wasted for the sole purpose of tax avoidance/evasion is mind boggling. If the NIL group is a 501(c)(3) non profit organization registered with the IRS, which pretty much every collective worth their salt is, it's absolutely a tax deductible donation by definition as a non profit organization.
|
|
|
NIL
Jan 22, 2023 20:02:54 GMT -5
Post by mikegarrison on Jan 22, 2023 20:02:54 GMT -5
One would hope that rich boosters paying college athletes to attend their alma maters shouldn't be tax deductible, but I'm not holding my breath on that one. The billions of dollars of economic activity wasted for the sole purpose of tax avoidance/evasion is mind boggling. If the NIL group is a 501(c)(3) non profit organization registered with the IRS, which pretty much every collective worth their salt is, it's absolutely a tax deductible donation by definition as a non profit organization. Except that a 501(c)(3) org has to meet certain definitions and follow certain rules, and it's not at all clear that this fits those. Like, for example, I can't create a 501(c)(3) organization that is solely dedicated to paying all my bills and then "donate" all my income to it, thus avoiding taxes.
|
|
|
NIL
Jan 22, 2023 20:10:07 GMT -5
Post by volleyguy on Jan 22, 2023 20:10:07 GMT -5
One would hope that rich boosters paying college athletes to attend their alma maters shouldn't be tax deductible, but I'm not holding my breath on that one. The billions of dollars of economic activity wasted for the sole purpose of tax avoidance/evasion is mind boggling. If the NIL group is a 501(c)(3) non profit organization registered with the IRS, which pretty much every collective worth their salt is, it's absolutely a tax deductible donation by definition as a non profit organization. Creating a non-profit for the purpose of providing NIL opportunities specifically to athletes at a particular university is going to have a hard time meeting the IRS definition of a public benefit charitable interest, or being seen as not serving a "private interest". I've been looking into this for months, and I think it's a very difficult thing to pull off. They are new, and there simply hasn't been any IRS scrutiny or case law as yet.
|
|
|
NIL
Jan 22, 2023 20:17:13 GMT -5
Post by slxpress on Jan 22, 2023 20:17:13 GMT -5
If the NIL group is a 501(c)(3) non profit organization registered with the IRS, which pretty much every collective worth their salt is, it's absolutely a tax deductible donation by definition as a non profit organization. Creating a non-profit for the purpose of providing NIL opportunities specifically to athletes at a particular university is going to have a hard time meeting the IRS definition of a public benefit charitable interest, or being seen as not serving a "private interest". I've been looking into this for months, and I think it's a very difficult thing to pull off. They are new, and there simply hasn't been any IRS scrutiny or case law as yet. Right. But nonetheless it's going to take IRS scrutiny for it not to happen. As of now, I'm not going to get in trouble to deducting my donations on my tax return. I'm donating to a 501(c)(3). I'm not doing anything wrong. If they don't want me to deduct it, they need to decide the organization doesn't deserve that designation after all. That's not for me to determine as a taxpayer.
|
|
|
NIL
Jan 22, 2023 20:20:12 GMT -5
Post by slxpress on Jan 22, 2023 20:20:12 GMT -5
If the NIL group is a 501(c)(3) non profit organization registered with the IRS, which pretty much every collective worth their salt is, it's absolutely a tax deductible donation by definition as a non profit organization. Except that a 501(c)(3) org has to meet certain definitions and follow certain rules, and it's not at all clear that this fits those. Like, for example, I can't create a 501(c)(3) organization that is solely dedicated to paying all my bills and then "donate" all my income to it, thus avoiding taxes. While that's true, if you're able to obtain the designation, and I give a donation to your organization, I'm not going to be in legal trouble for not doing a better job of investigating your organization to determine it's a legitimate 501(c)(3). Worst case scenario I won't be able to deduct that donation from my taxable income following an audit, and a change in status.
|
|
|
NIL
Jan 22, 2023 20:21:52 GMT -5
Post by n00b on Jan 22, 2023 20:21:52 GMT -5
Many of the NIL collectives pay the athletes to spend time with or endorse a charity of their choice. So the theoretical business purpose of these collectives are marketing for charities. I don't really know the law, but it sounds like that would be a legitimate non-profit, even if the amounts being paid for the athlete endorsements isn't real market value.
|
|
|
NIL
Jan 22, 2023 20:22:45 GMT -5
Post by mikegarrison on Jan 22, 2023 20:22:45 GMT -5
Creating a non-profit for the purpose of providing NIL opportunities specifically to athletes at a particular university is going to have a hard time meeting the IRS definition of a public benefit charitable interest, or being seen as not serving a "private interest". I've been looking into this for months, and I think it's a very difficult thing to pull off. They are new, and there simply hasn't been any IRS scrutiny or case law as yet. Right. But nonetheless it's going to take IRS scrutiny for it not to happen. As of now, I'm not going to get in trouble to deducting my donations on my tax return. I'm donating to a 501(c)(3). I'm not doing anything wrong. If they don't want me to deduct it, they need to decide the organization doesn't deserve that designation after all. That's not for me to determine as a taxpayer. This "what's done is done" idea seems overly simplistic. Especially if you were involved in setting up the org. I assume that, with the proper court rulings, the IRS can go back and say "no, that charitable donation was not legit, so now you need to repay your taxes plus interest".
|
|
|
NIL
Jan 22, 2023 20:24:01 GMT -5
n00b likes this
Post by mikegarrison on Jan 22, 2023 20:24:01 GMT -5
even if the amounts being paid for the athlete endorsements isn't real market value. Tax law very much is allowed to consider sham payments that exceed true market value.
|
|
|
NIL
Jan 22, 2023 20:30:41 GMT -5
Post by volleyguy on Jan 22, 2023 20:30:41 GMT -5
Except that a 501(c)(3) org has to meet certain definitions and follow certain rules, and it's not at all clear that this fits those. Like, for example, I can't create a 501(c)(3) organization that is solely dedicated to paying all my bills and then "donate" all my income to it, thus avoiding taxes. While that's true, if you're able to obtain the designation, and I give a donation to your organization, I'm not going to be in legal trouble for not doing a better job of investigating your organization to determine it's a legitimate 501(c)(3). Worst case scenario I won't be able to deduct that donation from my taxable income following an audit, and a change in status. Correct. For someone making a contribution to a non-profit collective, the worst that will happen is that the amount won't be allowed as a deduction. But for a deep-pocket donor, the "harm" is much more considerable. There was an amendment to the tax code that allowed the Salt Lake Winter Olympics to be designated a non-profit (501c3) as a promotor of international sports, but otherwise, pro leagues aren't allowed to operate as non-profits, and things like athletic facilities and equipment aren't tax deductible. The LOVB organization, for example, is a non-profit based in California, but it's website indicates that it receives funding from another non-profit in Maryland, which I assume is a work-around for tax purposes. Youth sports fall into the designation, however, so one idea is to have the NIL athletes do some type of coaching or mentoring specifically for youth sports organizations. But that doesn't address the problem that might exist from having the vast majority of expenditures be NIL-related towards a single institution.
|
|
|
NIL
Jan 22, 2023 20:30:54 GMT -5
Post by n00b on Jan 22, 2023 20:30:54 GMT -5
even if the amounts being paid for the athlete endorsements isn't real market value. Tax law very much is allowed to consider sham payments that exceed true market value. I'm all for it. Almost all of NIL is sham payments that exceed true market value. Although I'm sure the athlete has to pay income tax on the full amount.
|
|
|
NIL
Jan 22, 2023 20:34:47 GMT -5
bigfan likes this
Post by mikegarrison on Jan 22, 2023 20:34:47 GMT -5
Tax law very much is allowed to consider sham payments that exceed true market value. I'm all for it. Almost all of NIL is sham payments that exceed true market value. Although I'm sure the athlete has to pay income tax on the full amount. Yeah, but that's a separate issue. These things aren't being set up to shield the athletes from taxes. They are being set up to shield the boosters from taxes.
|
|
|
NIL
Jan 22, 2023 20:39:36 GMT -5
Post by n00b on Jan 22, 2023 20:39:36 GMT -5
I'm all for it. Almost all of NIL is sham payments that exceed true market value. Although I'm sure the athlete has to pay income tax on the full amount. Yeah, but that's a separate issue. These things aren't being set up to shield the athletes from taxes. They are being set up to shield the boosters from taxes. Does money necessarily go through the company? Or could they just function as matchmaker with the donor giving the money directly to the athlete? And what would the tax implications be?
|
|
|
NIL
Jan 22, 2023 20:56:30 GMT -5
via mobile
Post by slxpress on Jan 22, 2023 20:56:30 GMT -5
Yeah, but that's a separate issue. These things aren't being set up to shield the athletes from taxes. They are being set up to shield the boosters from taxes. Does money necessarily go through the company? Or could they just function as matchmaker with the donor giving the money directly to the athlete? And what would the tax implications be? That’s not how the organizations I give to are setup. I for sure make the donations to the organization. The texasonesports site allows me to designate what sport I want it to go to, but someone else is definitely making the decisions on how that money is being spent. There is no matchmaking involved. And I’m definitely deducting it from my taxable income, so if I’m going to pay taxes on it, it will require an audit and for the IRS to disallow it as a 501(c))(3). Not saying whether that will occur or not, but it hasn’t yet.
|
|