IRS Rules on NIL

[docrugby1]

The IRS may have issued a ruling that donations to NIL Collectives are not tax deductible. I am not sure the source "BroBible" is reliable but that may put a dent in donations to NILs. The ruling says the donations are not eligible since they do not benefit a legitimate exempt entity.
.
Senators Thune(R) and Cardin(D) introduced bill to that effect last year last year

 

[The Purple Knight]

Non-deductible and taxable to recipient. Do you think the players were expecting 1099 forms? This could be fun! Under the Biden administrations IRS expansion there should be plenty of agents to audit the donors and players. 😀

 

[JoeWildcat]

Non-deductible and taxable to recipient. Do you think the players were expecting 1099 forms? This could be fun! Under the Biden administrations IRS expansion there should be plenty of agents to audit the donors and players. 😀

Not really. The IRS has been having lots of trouble hiring people. My understanding is that they have hired about 2000 new people, 90% of whom are customer service agents to answer inquiries. Only about 200 were auditors/ investigators. There is such a big backlog of work, and they are still way understaffed compared to 10-15 years ago, that I suspect NIL investigations will be a low priority. Athletes probably will be shocked by the 1099’s though.

 

[FeralFelidae]

NU's NIL collective is specifically partnered with charities. Many (most?) collectives are not set up this way, but shouldn't NU's collective be in the clear?

 

[CatManTrue]

NU's NIL collective is specifically partnered with charities. Many (most?) collectives are not set up this way, but shouldn't NU's collective be in the clear?

TrueNU will be an interesting case study as they’re using donations to pay players to perform charitable acts.

 

[CatManTrue]

Truthfully, this greatly reduces the likelihood of my donating to it. Donations to NU are deductible

 

[NJCat]

Truthfully, this greatly reduces the likelihood of my donating to it. Donations to NU are deductible

You must have a ton of charitable contributions if you can itemize rather than take the standard deduction. My hat is off to you!

 

[CatManTrue]

You must have a ton of charitable contributions if you can itemize rather than take the standard deduction. My hat is off to you!

I live in a state with both high income taxes and property taxes.

Add in a mortgage, and we have had to itemize for years.

But remember: having deductions means you had to spend a lot of money on those things, which isn’t fun.

 

[JoeWildcat]

I live in a state with both high income taxes and property taxes.

Add in a mortgage, and we have had to itemize for years.

But remember: having deductions means you had to spend a lot of money on those things, which isn’t fun.

But the deductibility of state and local taxes is only $10,000. That is why I no longer itemize. (No mortgage, and contributions come from my IRA.)

 

[DaCat]

NU's NIL collective is specifically partnered with charities. Many (most?) collectives are not set up this way, but shouldn't NU's collective be in the clear?

Apparently TrueNU is set up as a charity.

Records show the Internal Revenue Service (IRS) sent a favorable determination letter regarding TrueNU’s tax-exempt status in early November to the Cincinnati-based law firm Taft Stettinius & Hollister. The IRS lists TrueNU as a public charity, which means individuals can deduct contributions up to 50 percent of their adjusted gross income or up to 60 percent for cash contributions.​

It seems TrueNU is organized specifically as a non-profit, as described on their home page: "TrueNU is recognized as a 501(c)3 organization by the Internal Revenue Service, exempt from federal income tax. Donations can be claimed as charitable income tax deductions. "

 

[Hungry Jack]

NU's NIL collective is specifically partnered with charities. Many (most?) collectives are not set up this way, but shouldn't NU's collective be in the clear?

You can have a non-profit corporation that is not a 501(c)3, which is the federal designation for tax exemptions at the federal level. Employees of 501(c)3 organizations still must pay income taxes. Players "employed" by non-profits will almost certainly require a 1099 and have a federal tax liability per IRS rules.

 

[DaCat]

You can have a non-profit corporation that is not a 501(c)3, which is the federal designation for tax exemptions at the federal level. Employees of 501(c)3 organizations still must pay income taxes. Players "employed" by non-profits will almost certainly require a 1099 and have a federal tax liability per IRS rules.

That's right. Donations to the non-profit are tax deductible, but the compensation received by the athletes from the non-profit are taxable.

 

[FeralFelidae]

You can have a non-profit corporation that is not a 501(c)3, which is the federal designation for tax exemptions at the federal level. Employees of 501(c)3 organizations still must pay income taxes. Players "employed" by non-profits will almost certainly require a 1099 and have a federal tax liability per IRS rules.

I'm mainly concerned with the donations. Players getting paid for their "name, image, and likeness" should definitely be taxed for it.

 

[hdhntr1]

The IRS may have issued a ruling that donations to NIL Collectives are not tax deductible. I am not sure the source "BroBible" is reliable but that may put a dent in donations to NILs. The ruling says the donations are not eligible since they do not benefit a legitimate exempt entity.
.
Senators Thune(R) and Cardin(D) introduced bill to that effect last year last year

Got to think that they would potentially be deductible as business expenses (advertising). But I can also understand not for the deductible for the individual which as you say could create problems for NU