August 4, 2012
The Tax Treatment of Intercollegiate Athletics
Christopher L. Tazzi (J.D. 2011, Notre Dame), Note, To Tax or Not to Tax, That Is the Question: Searching For a Solution to the Increasing Commercialization of Intercollegiate Athletics, 38 J.C. & U.L. 381 (2012):
Part I details the historical development of intercollegiate athletics. Although American intercollegiate athletics began as a mere “jolly lark” between members of the Harvard and Yale crew teams on Lake Winnipesaukee in New Hampshire, the current state of college athletics is far removed from these humble beginnings; the overall history paints a story of increasing commercialization. Part II surveys public and governmental responses to this increasing commercialization of intercollegiate athletics -- from a 1929 report issued by the Carnegie Commission to a March 2011 call to restrict eligibility for the NCAA men's basketball tournament. Of particular import to this Article, much of the inquiry has concerned whether or not the increasing commercialization of college athletics threatens the tax-exempt status of universities and the NCAA (or at least whether they should be subjected to the Unrelated Business Income Tax). In order to understand this particular inquiry, Part III will provide a primer on applicable tax-exempt law. Part IV will then proceed to apply these tax rules to intercollegiate athletics, and ultimately will conclude that despite increasing commercialization, colleges and universities, and the NCAA are at little risk of losing their tax-exempt status (or being subject to the Unrelated Business Income Tax) under current tax law. Finally, Part V will analyze whether this result is normatively correct.
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