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Tuesday, July 6, 2004

Tax Prof Sleuths Unpack Coach K's Compensation

Tuesday, July 6, 2004

Coach K Stays at DukeThe West Coast has been atwitter about Coach Krzyzewski turning down $8 million per year for coaching the Lakers to remain at Duke. An article in Sunday's LA Times noted that "[a]s a private institution, Duke doesn't have to disclose faculty salaries, but Krzyzewski has been reported to earn between $600,000 and $800,000, making him the highest-paid university official above even Duke's president." Ellen Aprill (Loyola-L.A.) sparked a discussion on the Tax Prof Discussion Group about how the reporter seriously underestimated Coach K's Duke haul.

Professor Aprill unearthed Duke's Form 990 on the Guidestar web site, which reports over $1.3 million in payments to Coach K:

• Compensation: $743,000
• Pension Contributions & Deferred Compensation: $65,000
• Expense Account and Other Allowances: $519,000
What exactly is that 500k expense account? The Form 990 instructions say this entry is to include "both taxable and nontaxable fringe benefits" and "expense allowances or reimbursement that the recipients must report on their separate income tax returns." The instructions continue:
Examples include amounts for which the recipient did not account to the organization or allowances that were more than the payee spent on serving the organization. Include payments in connection with indemnification arrangements, the value of the personal use of housing, automobiles, or other assets owned or leased by the organization (or provided for the organization without charge), as well as any other taxable and nontaxable benefits.
My guess is the 500k number does not include the huge amounts Coach K likely gets from non-Duke entities like Nike (for using its sneakers) and local radio & TV stations (for appearances on weekly shows), but does include money for basketball camps at Duke. Duke Tax Prof Richard Schmalbeck offers another possibility:
Coach K does a lot of travel for recruiting, and he may prefer not to account for it through Duke so as not to be subject to our restrictions on things like first class plane tickets and the like. So he may just have a travel allowance that becomes gross income, subject to whatever deductions he can justify on his tax return. (He probably has enough miscellaneous itemized deductions that that isn't a problem for him.)
(Coming on the heels of posts contrasting Tax Prof salaries with those of law firm summer associates and partners, we are not inaugurating a new feature on People Who Earn More Than Tax Professors -- we do not have the space!)

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Comments

As tax professors, you get the rare
opportunity to think things through
and write articles that make a difference
in our society. That is precious, and
if you can live in reasonable comfort on
a professor's salary, you have the respect
and admiration of many in the practicing
tax bar.

Posted by: Steven Sholk | Jul 6, 2004 3:59:35 PM

As tax professors, you get the rare
opportunity to think things through
and write articles that make a difference
in our society. That is precious, and
if you can live in reasonable comfort on
a professor's salary, you have the respect
and admiration of many in the practicing
tax bar.

Posted by: Steven Sholk | Jul 6, 2004 3:59:52 PM

I'll admit I laughed, but I wasn't proud of myself for laughing...(smile)

Posted by: Jozef | Jul 6, 2004 5:01:23 PM

I suspect that the Coach's salary is in excess of $1M. The Baltimore papers disclosed the salaries of the Maryland basketball and football coaches and both were at or above the $1M mark and I suspect that Krzyzewski's star quality puts him well over that mark.

Then again, the Terps beat Duke in the ACC Basketball Tounament last season.

Posted by: Stuart Levine | Jul 7, 2004 9:26:02 AM