Now here is a fact that is not so widely known – the National Football Association which you figure makes a ton of money is recognized by the IRS as a tax-exempt entity. You heard me right – the National Football League does not pay income taxes as any for-profit-company would.
Section 501(c)(6) of the Internal Revenue Code provides for the exemption from tax entities which are not organized for profit and no part of the net earnings of which inures to the benefit of any private shareholder or individual.
Those entities are specifically:
- business leagues,
- chambers of commerce,
- real estate boards,
- boards of trade and
- professional football leagues.
It’s obviously notable that only professional football leagues are included here, as opposed to all sporting leagues.
It seems inconceivable that the NFL is not “engaging in a regular business of a kind ordinarily carried on for profit”. How are their efforts to maximize profits any different than those of Major League Baseball, the National Basketball Association or the National Hockey League?
Well professional football leagues were not always included in this list. This change dates back to 1966, when the tax code was amended to give a professional football league tax-exempt status in order to facilitate the merger of the NFL and the old American Football League.
So one may ask – if I go on NFL.com and order super bowl tickets, can I claim a charitable deduction? Well the tax law states that when you make a donation to a charity and receive a benefit back, the amount deductible is only the excess of your contribution over the benefit you receive. Also, your charitable deduction cannot include the value of any benefits you received from the charity. An example would be where you paid $200 to attend a charitable ball for which the charity states that the value of the ticket is $75. In such an instance your charitable deduction would be $125.
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