Tax Reform May Impact College-Athletics Event Seating Contributions and Deductions

As part of tax reform, referred as the Tax Cuts and Jobs Act, the 80–20 charitable deduction rule for payments made in exchange for college-athletics event seating rights has been repealed.

Colleges and universities that are dependent on this income stream are understandably concerned. Taking a closer look at the law may alleviate some of this worry—as will taking the appropriate steps to preserve donors’ tax deductions.


Prior to January 1, 2018, donors could take a charitable deduction for 80% of a payment made to an institution of higher education that gave the taxpayer the right to purchase tickets for an athletic event at the institution’s stadium. The remaining 20% wasn’t deductible because it was treated as a quid pro quo for the value of the seating rights. This alleviated the college or university’s responsibility to value the return benefit received by the donor, reducing the burden on the school.

The new tax reform law repeals this 80–20 split. However, it doesn’t affect laws relating to charitable contributions and quid pro quo rules that allow a donor to take a tax deduction for payments made in excess of return benefits received—as long as there’s charitable intent. 

For example, if a donor gives $1,000 to a qualifying organization and receives tickets to an event in return valued at $100, a charitable donation of $900 still applies.

Key Criteria for Tax Deductions

For a donor to take a tax deduction, several factors must be in place:

Charitable Intent

The donor must have charitable intent in making the gift. If the payment amount doesn’t exceed the fair market value of the benefits received by the donor, or if the institution has told the donor no portion of their payment is tax deductible, no charitable deduction will be allowed.

Valuing Donor Benefits

The institution must determine the value of the benefits it provides to the donor. The difficulty of valuing seating rights was the reason the 80–20 rule was added to the Internal Revenue Code (IRC).

Without this rule, an institution must use a reasonable basis for determining the value received, which can be substantial if events are regularly sold out and tickets aren’t generally available.

Donor Receipt

The institution must issue donor letters that include the following:

  • Acknowledge receipt of a donation
  • Report the value of return benefits received

Without this letter, the IRS is unlikely to allow the donor a tax deduction. This is because the full payment would likely be treated as equal to the value of the seating rights received.


Revenue Rule 86-63 provides examples that may help institutions apply the rule change.

Example One

An individual makes a $300 payment to a university’s athletic scholarship program. This minimum payment is required to become a member of the program—a status that affords an individual the right to purchase a season ticket to the university's home football games. Because the games are regularly sold out well in advance, tickets to the games covered by the season ticket wouldn’t be readily available if the individual weren’t a member.

In this case, there is no payment made in excess of the substantial return benefit received, which means there’s no charitable deduction.

Example Two

The facts are the same as in example one except the individual makes a payment of $500 to the program, even though only a $300 payment is required to become a member. The additional $200 doesn’t result in any additional benefits.

Accordingly, the $200 is deductible as a charitable contribution.

Example Three

An individual makes a payment of $300 to a university’s athletic scholarship program.  Membership entitles the individual to purchase a season ticket in a designated area in the stadium by making an additional payment for the stated ticket price. Tickets are offered to members before season tickets go on sale to the public. The events aren’t sold out, and seating options reasonably comparable to those available to members are readily available.

In this scenario, the benefits of obtaining a ticket early and sitting with other program members aren’t substantial. Because similar seats are available to nonmembers, the entire $300 is a charitable contribution.

Example Four

Similar to example three, games don’t sell out. However, in this scenario, reasonably comparable seating for nonmembers isn’t available. The university estimates the fair market value of the right to purchase a season ticket in the designated area of the stadium and advises prospective members that the additional membership payment above fair market value of the seating right is being solicited as a contribution. In making this estimate, the university considered these factors:

  • Level of demand for tickets
  • General availability of seats
  • Relative desirability of seats based on type, location, and view

The right to purchase a season ticket in the designated area is deemed a substantial benefit in this scenario. However, because the university took appropriate steps to value that benefit and notified prospective members that the additional amount was being solicited as a contribution, the payment in excess of the fair market value of the seating rights is a charitable contribution.

Based on the phrasing of the amended IRC Section 107(l)(2), Revenue Rule 86-63, and cases involving donations made in excess of quid pro quo payments, only the portion of a payment representing the fair market value of seating rights or tickets is nondeductible. The portion paid in excess of fair-market-value benefits received continues to be a deductible contribution as long as there’s donative intent.

We’re Here to Help

Institutions of higher education that receive payments in return for seating rights can benefit from determining the value of these rights and revising donor communications to preserve the tax deduction for their members. 

For more information on how tax reform may affect this component of your university or college’s giving programs, contact your Moss Adams professional or visit our dedicated tax reform webpage.

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