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For JKCPA: Tom is a huge college football fan. In the past,

For JKCPA: Tom is a huge...
For JKCPA:
Tom is a huge college football fan. In the past, he has always bought tickets from scalpers. This year, he has decided to join the university's season ticket program, which requires a $2000 contribution that gives him the right to purchase the tickets. Shaun will then pay $400 per season ticket. Tom understands that the price paid for the season tickets is not tax deductible as a charitable contribution. However, contributions to a university are tax deductible. Determine how much if any of the $2000 is tax deductible.

I cannot find the IRC code for this type, and in searching I have completely confused myself. Any help would be great
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Answered in 17 minutes by:
9/4/2012
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15,871
Experience: 15years with H & R Block. Divisional leader, Instructor
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Hello and thank you for using Just Answer,

JKCPA is not online. If you will accept an answer from someone else I would gladly assist you.

Charitable contributions are covered in

26 USC § 170 - Charitable, etc., contributions and gifts

The section you may be looking for is

(l) Treatment of certain amounts paid to or for the benefit of institutions of higher education (1) In general For purposes of this section, 80 percent of any amount described in paragraph (2) shall be treated as a charitable contribution. (2) Amount described For purposes of paragraph (1), an amount is described in this paragraph if- (A) the amount is paid by the taxpayer to or for the benefit of an educational organization- (i) which is described in subsection (b)(1)(A)(ii), and (ii) which is an institution of higher education (as defined in section 3304(f)), and (B) such amount would be allowable as a deduction under this section but for the fact that the taxpayer receives (directly or indirectly) as a result of paying such amount the right to purchase tickets for seating at an athletic event in an athletic stadium of such institution. If any portion of a payment is for the purchase of such tickets, such portion and the remaining portion (if any) of such payment shall be treated as separate amounts for purposes of this subsection.

 

If Tom is not allowed to purchase the tickets at a below market price, then the contribution to the university would be allowed.

 

Here is a link to the IRC through Cornell Law

http://www.law.cornell.edu/uscode/text/26/170

It is near the bottom as you scroll.

 

If you prefer to wait for JKCPA to come online I will understand but respectfully XXXXX XXXXX not rate my assistance.

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Customer reply replied 5 years ago

What would the amount be? I am taking the $2000 and subtracting the $400 and then taking 80% of that total. Am I right?

You need not subtract the cost of the tickets from the contribution as long as the $400 would be the cost any way. You would only need to worry about the cost of tickets if others that do not make a contribution would be required to pay more than $400.

80% of the $2000

0% of the $400

If the cost is discounted then you would need to subtract the discount from the $2000 then 80% of that for contribution.

If tickets are normally $600 then the $200 discount would come from the $2000 ($1800) and 80% of the result would be the contribution($1440)

Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15,871
Experience: 15years with H & R Block. Divisional leader, Instructor
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Customer reply replied 5 years ago

I am assuming that the cost is $400, so in this case I would just take 80% of the $2000?

Correct

Thank you for the positive rating.

Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15,871
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