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Earn a tax-cut boost from your booster-club donations

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in Small Business Tax

Are you a rabid fan of your alma mater's sports teams or the local college powerhouse? There's a way you can pocket a nifty tax break while showing support for your favorite athletes.

Strategy: Make a donation to a college booster club or a similar program. You can deduct all or part of the payment on your tax return as a charitable contribution, even if the gift provides you with preferred ticket status for athletic events.

Here's how it works: If you make a contribution to a college program that entitles you to buy tickets to an athletic event, you can deduct 80 percent of the cost of the donation. Any part of the payment that goes toward the actual tickets is nondeductible.

For instance, if you receive tickets as part of the donation to a booster club, you deduct the cost of the tickets before applying the 80 percent rule.

Example: Follow the money. Suppose that you pay $500 a year to belong to an athletic scholarship program at State U. The only benefit from that membership is that you earn the right to buy season tickets in a designated section of the football stadium. Since the donation doesn't include the cost of any tickets, you can deduct $400 (80 percent of $500).

Now, let's change the facts slightly. Suppose that the $500 donated amount includes the purchase of two tickets to five home games for a total of $300. In that case, your deduction is limited to $160 (80 percent of $500 minus $300).

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