The NCAA News - News and Features

The NCAA News -- June 21, 1999

IRS says it will change decision on deductions

The Internal Revenue Service has committed to reverse a previous decision regarding whether a donation to support athletics facility renovation is tax deductible if a guarantee to lease a skybox is provided in return.

The original decision of the IRS was based on a case involving Iowa State University. In 1996, the R.L. French Corporation donated $200,000 to the Iowa State University Foundation for a 10-year lease on a luxury box. The university determined that the value of the luxury suite and parking was $20,520. The corporation took a tax deduction on the allowable 80 percent of the remaining $179,480.

The IRS regional office said the deduction could not be claimed as a charitable contribution, ruling that the right to lease the skybox could be secured only through a gift of $200,000.

The NCAA, the American Council on Education, the National Association of Collegiate Directors of Athletics and the Division I-A Athletics Directors Association joined together to support the claim made by the R.L. French Corporation.

On June 4, the IRS agreed that it had misinterpreted the law and agreed to reverse its earlier position.

A letter from the NCAA, NACDA, ACE and the Division I-A Athletics Directors Association has been sent to the IRS asking for written confirmation of its June 4 interpretation.

Individuals with questions about this situation may contact the NCAA federal relations office at 202/293-3050.