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Kick off deductions for booster club gifts

by on
in Small Business Tax

Are you a rabid fan of the athletic teams at a local college or your alma mater? There’s a way to pocket a nifty tax break while supporting the school’s gridders, cagers or other athletes.

Strategy: Donate funds to a college booster club or a similar program. Reason: That way, you can deduct all or part of the payment as a charitable contribution—even if the gift provides you with preferred ticket status for athletic events involving the school.

Here’s the whole story: If a taxpayer gives a gift to a college program that entitles the donor to buy tickets to an athletic event, the taxpayer can still deduct 80% of the donation cost. Any part of the payment that goes toward the actual tickets is nondeductible.

If you receive tickets as part of the donation to a booster club, you must deduct the cost of the tickets before applying the 80% rule.

Example: Extra points for being tax-smart

Let’s say you pay $1,000 a year to belong to an athletic scholarship program maintained by your favorite college. The only benefit from this membership is that you receive the right to buy season tickets in a designated section of the football stadium. Since the donation does not include the cost of any tickets, you can deduct $800 (80% of $1,000).

Now let’s change the facts slightly.

Suppose the amount you’ve donated includes the purchase of two tickets to six home games for a total of $300. In that case, the deduction is limited to $560 (80% of the difference between $1,000 and $300).

Tip: As usual, you can deduct the full amount of charitable gifts that have no strings attached. So, if you give a booster club $1,000 with no benefits in return, you may deduct the entire $1,000.

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