Small Business Tax Strategies

Smart small business owners save thousands of dollars per year on their personal and business taxes by taking advantage of the legal loopholes that the government creates for their unique tax situation. Small Business Tax Strategies cuts through tedious tax code to reveal the bonanza of completely legal opportunities to grow personal wealth and secure an enjoyable retirement.  Learn more about Small Business Tax Strategies and the two free reports you’ll get when you subscribe...

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.