Tax Implications of Student-Athlete NIL Deals and Collectives: Federal and State Tax Issues, Planning, and Reporting

In National Collegiate Athletic Association v. Alston (U.S. 2021), the Supreme Court unanimously ruled that NCAA rules limiting member institutions from providing student-athletes with education-related benefits and awards violated federal antitrust law. Shortly thereafter, the NCAA suspended its restrictions on student-athletes receiving compensation related to their name, image, and likeness (NIL), which opened up substantial financial opportunities for student-athletes. Those executing NIL agreements face significant federal and state tax implications, including income tax responsibilities, state nexus, and reporting obligations.

Under the NCAA interim policy, student-athletes can be compensated for endorsements without putting their NCAA eligibility at risk, but other forms of payment remain prohibited, such as payment to athletes by the schools for their performance. As a result, many student-athletes receive monetary compensation and/or goods by entering into contracts to promote and market their NIL.

Generally, both monetary and non-monetary compensation are considered taxable income. This forces student-athletes to consider the tax implications, reporting requirements, and available tax planning options if they are benefiting from their NIL. Tax advisers for companies, universities, and athletes must keep in mind the various federal and state tax issues as well as potential issues stemming from NIL agreements.

Listen as our authoritative panel examines applicable rules and regulations for NIL deals and entities engaging in these transactions, federal and state tax challenges, reporting requirements, and tax planning for student-athletes. The panel will also discuss the tax implications for NIL collectives in college sports and those with tax-exempt 501(c)(3) status, and other issues.

1. NIL regulations and policies
   1. Recent cases
   2. NCAA interim rules
   3. State laws and school policies
2. NIL collectives
   1. How are they structured?
   2. Regulatory framework
   3. Tax-exempt NIL collectives
3. Tax considerations for student-athletes
   1. Federal tax considerations
      1. Sponsorship and service income
      2. Cash awards
      3. Royalty income
      4. Impact on financial aid
   2. State tax implications
4. Best practices for counsel and advisers structuring NIL agreements

The panel will discuss these and other key issues:

• Current rules and regulations allowing student-athletes the ability to endorse goods and services
• Types of NIL deals and key tax considerations for student-athletes, universities, and companies
• Best practices for attorneys and advisers structuring student-athlete-involved NIL agreements
• Navigating the federal tax rules, reporting requirements, and available tax planning strategies
• NIL collectives and special rules governing tax-exempt NIL collectives
• Key state tax considerations for student-athletes and companies

Learning Objectives

After completing this course, you will be able to:

• Understand the current rules and regulations allowing student-athletes the ability to generate income with NIL deals
• Recognize the types of NIL deals and key tax considerations for student-athletes, universities, and companies
• Identify key provisions in NIL agreements that can trigger potential tax liability for student-athletes
• Understand the federal tax rules, reporting requirements, and available tax planning strategies for student-athletes with NIL deals
• Identify key tax issues for NIL collectives and special rules governing tax-exempt NIL collectives

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of individual income taxation, including itemized deductions, individual income tax credits, net operating loss limitations including carrybacks and carryforwards.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).