New tax law’s impact on UConn sports?

[oldude]

With UConn and the state of CT already struggling with a very large budget deficit, the last thing the school needs is changes to the tax law that have the potential to negatively impact both costs and revenues.

The new tax law has a provision that places a 21% excise tax on the university for any college employees earning over $1 million annually, provided those employees are among the top 5 earners at a school. The structure of the contract is relevant with deferred income not subject to the excise tax, but there will likely be in impact to the University based on the HC salaries for football & basketball. It could be worse. Alabama will pay over $1.2 million on Nick Saban’s salary alone.

A second change involves the elimination of tax deductions for donations associated with ticket purchases. For many boosters, their purchase of season tickets is packaged with a significant donation to a school’s athletic department. Those donations are no longer tax deductible. Not sure how significant a source of revenue such ticket based donations are at UConn, but at schools like Bama and tOSU, they amount to millions of dollars.

 

[bags27]

I yield to you, oldude, who obviously knows a zillion times more about this than I.

But just to say that regarding the potentially disastrous effects on Northeastern states of capping deductions for state and property taxes at 10k, the governors are trying to figure out different ways of packaging/rebranding those taxes to get around the cap. I'm sure universities will do the same with salaries. For example, IIRC, Geno's salary is "only" 400k; the rest are fees paid him by the athletic dept. for public representation (speeches etc). It's really a matter of rebranding here.

As to the tax donations for ticket purchases: I didn't know this was possible, but I seriously doubt the lack of that will deter many fans.

But I am a complete doofus when it comes to tax strategies....

 

[oldude]

I yield to you, oldude, who obviously knows a zillion times more about this than I.

But just to say that regarding the disastrous effects on Northeastern states of capping deductions for state and property taxes at 10k, the governors are trying to figure out different ways of packaging/rebranding those taxes to get around the cap. I'm sure universities will do the same with salaries. For example, IIRC, Geno's salary is "only" 400k; the rest are fees paid him by the athletic dept. for public representation (speeches etc). It's really a matter of rebranding here.

As to the tax donations for ticket purchases: I didn't know this was possible, but I seriously doubt the lack of that will deter many fans.

But I am a complete doofus when it comes to tax strategies....

Not sure about speaking fees, shoe contracts, etc. but income from sports camps at the University are included under the excise tax provisions. As you imply, schools, businesses and tax accountants everywhere are pouring over the new rules in an effort to minimize tax exposure. One of the difficulties is that the underlying regulations supporting the tax law have yet to be written by the IRS.

 

[BroadwayVa]

With UConn and the state of CT already struggling with a very large budget deficit, the last thing the school needs is changes to the tax law that have the potential to negatively impact both costs and revenues.

The new tax law has a provision that places a 21% excise tax on the university for any college employees earning over $1 million annually, provided those employees are among the top 5 earners at a school. The structure of the contract is relevant with deferred income not subject to the excise tax, but there will likely be in impact to the University based on the HC salaries for football & basketball. It could be worse. Alabama will pay over $1.2 million on Nick Saban’s salary alone.

A second change involves the elimination of tax deductions for donations associated with ticket purchases. For many boosters, their purchase of season tickets is packaged with a significant donation to a school’s athletic department. Those donations are no longer tax deductible. Not sure how significant a source of revenue such ticket based donations are at UConn, but at schools like Bama and tOSU, they amount to millions of dollars.

I lived in Ct for many years and part of that was a Uconn employee. Each time a tax law was changed --chicken little came out and told us the sky was falling. Certainly some things changed some options were used. But eventually little had changed. Frankly, I was a happy camper when I MADE enough money to pay those taxes some complained about. There still are some of those around who are not worrying about deducting Ticket prices from their taxes . More than taxes, like them, at one time I worried about my family--not taxes.
So now that I pay my fair share of taxes, I still side with those who have no emphathy for those wealthy enough to complain about their ox being gored.\

 

[Sonny44]

I'd like to see Geno et. al. move the team to Florida. No problems here.

 

[paisan]

Seems to be much ado about nothing ... Needed a change in tax structure ..now we have it.

 

[dogged1]

I'd like to see Geno et. al. move the team to Florida. No problems here.

Yes, I can see it now, "The University of Connecticut at South Beach".

 

[oldude]

Article in USA Today indicates a major impact at big name sports schools, not necessarily including UConn. Hence my question as to the potential impact on UConn sports. While Geno’s compensation may slide under the excise tax, I’m not sure that Edsal and Ollie’s salaries won’t result in a financial hit to the budget.

As for a big name school like tOSU, several years ago a business associate of mine, and graduate of tOSU, was lamenting the fact that the Buckeyes had bumped his required donation to over $1000 annually in order to maintain his allocation of 2 tickets to 1 game at the Horseshoe to watch his beloved Buckeyes play football. This guy was not rich by any stretch of the imagination. He eventually swallowed hard and ponied up the money.

I can’t even imagine what donation is required for season tickets on the 50 yd line.