If a person is paid an exorbitant amount of money for a job that normally would cost much less, they have been given a wage plus a GIFT. Gifts over a certain amount are subject to a gift tax...paid by the giver. In addition, the gift portion of the payment is not deductible as an expense. Somebody needs to get the IRS on this before NIL ruins college sports.
When will the IRS focus on NIL payments?
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Not sure I agree. If they are getting paid $50K to mow my lawn, then yeah, but a lot of this is appearance stuff, and I'm sure there is justification for large sums of money for stuff like that.
Although in cases where you see someone got a car, then I'd assume the gift tax comes into play (although if it was a car to promote your dealership, maybe not).
NIL is not going to ruin college sports in any way, shape or form. I'm sure it will be rocky at first, but honestly, this first stretch has been way less rocky than I expected.
I'm pretty sure NIL deals are contact engagements. Whatever both parties agree to should be fine.
Not sure where you're going with this thought train, but if you had an autograph signing job, I would be able to negotiate a much lower fee than, say, Brock Purdy.
And I have a PE stamp that gets used, so I probably get paid more than you to sign my name in certain circumstances...
If I had to guess these are being deducted as business expenses and 1099s are going to be issued. There will be some college athletes who get wicked tax bills they don't know about until too little too late.
Pretty sure gift taxes just apply to payments that would not otherwise be classified as income.
NIL payments would probably almost all be simply classified as 1099 income and recipients would be taxed at the normal rates for any of that income.
And yeah, when it comes to image\endorsements, your market value is essentially unlimited. Your market value essentially is "what you are paid".
- Mar 27, 2006
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I'm sorry. This is not even remotely correct. These NIL deals for college athletes are perfectly legal. They're not gifts. They're income. The IRS is not coming to the rescue here. If someone doesn't pay their taxes properly, they will be investigated and punished accordingly, but there's not going to be some crescendo moment where suddenly NIL deals are illegal. This is reality.
Maybe the athletes can offset their gains with losses from gambling . . . . . just need to take tips from CW!
I’m sure when they see the tax bill they’ll agree NIL is a bad idea and return all the money. It’s the only sensible thing.
Depends. If the Athlete has good people advising them they'd structure and LLC to avoid paying those items on the full amount.
We will probably eventually see some high profile NIL case where the IRS is involved.
Do you save money on taxes if you set up a 1065 or 1120 instead of a schedule C?
I think you'll have a hard time proving wage are too high. It's a agreed upon amount by both parties.
If people are expecting an outside source to regulate NIL, like the IRS, it’s not going to happen. College athletes have the same ability to make money outside of their sport as professional athletes do. Endorsements, commercials, merchandise, etc. are all fair game. College athletes have been restricted from making money that any pro, or non-athlete has had access to.
The best thing is to do is accept it and support our schools activity in it so we don’t fall even further behind our peer schools. We missed the boat in the 70s, 80s, and 90s when’s lot of schools were building their media brands they have now become. Let’s not miss this boat.
The best thing is to do is accept it and support our schools activity in it so we don’t fall even further behind our peer schools. We missed the boat in the 70s, 80s, and 90s when’s lot of schools were building their media brands they have now become. Let’s not miss this boat.
I agree it is hard to determine the true value of an endorsement. However, if a new player comes in with $200,000 deal and the next highest paid player only gets $10,000, it could be a red flag. Especially if the $10,000 person was considered the previous best player and has been there 3 years.Think about what an average (not elite)pro athlete, that is more widely known, would get paid.
I know it's important for ISU fans to step up with $. Just wish there weren't other teams willing to pay whatever it takes to put a good team together.
I know it's important for ISU fans to step up with $. Just wish there weren't other teams willing to pay whatever it takes to put a good team together.
- Mar 27, 2006
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A red flag for what, though? There's nothing illegal about one player getting more NIL money than another, regardless of their talent.
If I buy a LeBron James autograph for $100 and a Georges Niang autograph for $100,000 would the IRS come after me for a gift tax? No way, so why would me buying an Omaha Biliew autograph for $100,000 be different?