Happy National Tailgating Day! As we fire up the grill and hang up the pendants in prep for some college football, I figured today was the perfect day to explain where college sports ticket rights fall under the tax code. Why? Because the Tax Cuts and Jobs Act (TCJA), passed in 2017, made some major changes to the deduction for charitable contributions.
A Bit of History
Before the tax code overhaul, donations made to nonprofit universities and colleges in exchange for the direct or indirect right to purchase seats at athletic events were 80% deductible as a charitable contribution on itemized taxes. Since the late 1980s (under the Technical Corrections Act of 1988), colleges used this tax code provision to incentivize donors’ gifts and modeled the practice after seat licenses in pro sports. However, this was a costly provision; this tax break was apparently costing the U.S. Treasury at least $100 million a year (at the time of estimation in 2012), and possibly as much as $1 billion, according to Bloomberg.
Federal Tax Change: Deduction Repealed
In the post-TCJA world, this deduction is now repealed. So, what do you need to know? If you make a donation to a university in exchange for a receipt that gives you the ability to purchase certain seats (think the 50-yard line at Kinnick Stadium!), this charitable gift is no longer tax-deductible at the 80% rate on your federal income taxes. Of course, you can still elect to make valuable, qualified charitable donations to your alma mater or another favorite higher education institution, but college sports fans can’t claim a tax break specifically made to secure college sports season tickets.
State of Iowa Taxes: Deduction Remains
However, Iowa sports fans cans still cheer, because Iowa did not parallel the federal repeal. Individuals can still deduct 80% of a qualifying contribution for those Cyclone, Panther, Bulldog, or Hawkeye seats to the extent it does not exceed the individual’s applicable adjusted gross income deduction limitation on state income taxes. Keep in mind, of course, you will need to itemize to claim the deduction.
Still have questions about how to maximize contributions to your favorite college or university (for athletic seats or otherwise)? We can work out a plan so that you can meet your charitable giving goals in a tax-wise manner. I offer a free, no-obligation consult, so don’t hesitate to contact me.