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Kick off deductions for booster clubs

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in Small Business Tax,Small Business Tax Deduction Strategies

With the college football season underway and basketball looming, you may root hard for your favorite teams. But you can do more than show vocal support from the sidelines.

Strategy: Donate funds to a “booster club” or similar program. This entitles you to a charitable deduction for all or part of the donation—even if the gift provides you with preferred ticket status for athletic events.

But it isn’t a slam-dunk by any means.    

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

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

Example: You pay $1,000 a year to belong to an athletic scholarship program maintained by your alma mater. The only benefit from this membership is you receive the right to buy season tickets in a designated section of the football stadium. Because the donation doesn’t include ticket costs, you can deduct $800 (80% of $1,000).

Now let’s change the facts slightly. Suppose the donation 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: Generally, you can deduct the full amount of charitable gifts with no strings attached. So, if you donate $1,000 to a booster club with no benefits in return, you may deduct the entire $1,000.

Swing for bigger business deductions

Normally, the deduction for business entertainment expenses is limited to 50% of the cost. But there’s a special tax rule for certain athletic events that are fund-raisers.

Case in point: You buy tickets to a golf tournament where the net proceeds are donated to charity. In this case, the donation is fully deductible as a business expense, even if you attend or participate in the event.

Also, you can add the cost of related expenses, including parking, use of entertainment areas and meals furnished as part of the event.

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