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There are issues with every one of these organizations. IRS has a term called reasonable compensation. I’ll bet every one of these organizations is paying at least one player well over what they are worth NIL wise. These organzations are paying players the value of their NIL. 99.99% of these players at this point in their life do not have the 5% of the brand power of Patrick Mahomes, yet they’re making 5% of what Mahomes makes in endorsement deals. The lady on the podcast even mentions the values be given out as an issue. In order to make 5% of what Mahomes makes in endorsements, these players would have to be promoting things day and night. The system is a joke and if Congress won’t fix it, the IRS will.Not an issue with onward. No games being played
They are skirting the system. I’m ok with people giving away money. If you earned it, spend it however you choose. But what they’re doing is not within reasonable compensation. Let’s call it what it is. It’s not compensation. It’s not NIL. It’s a gift, which should require a gift tax return.People have the money and are willing to pay these amounts. Everyone wants their taste.
Agreed. But even that won’t stop its impact on the sport. This chaos is here to stay and once the tax man is involved who knows what loopholes some will find.They are skirting the system. I’m ok with people giving away money. If you earned it, spend it however you choose. But what they’re doing is not within reasonable compensation. Let’s call it what it is. It’s not compensation. It’s not NIL. It’s a gift, which should require a gift tax return.
That part is clear. But if they’re paying player X $150,000.00 they better be able to justify why player X is worth that. Nobody in the real world is working a month of sports camps and making $150,000.00. That’s where a lot of these organizations will run into problems as the woman in the podcast mentioned talking about the value of the player.Onward makes it clear they are nit a 501c as i remember
Reasonable compensation is a term that's generally applied to payments made to officers or shareholders. Have you ever seen the IRS apply it to someone without ownership or control?They are skirting the system. I’m ok with people giving away money. If you earned it, spend it however you choose. But what they’re doing is not within reasonable compensation. Let’s call it what it is. It’s not compensation. It’s not NIL. It’s a gift, which should require a gift tax return.
Owners overpaying their kids has been looked at. But that’s not done in the public eye. So they have to search to find it. This is in your face out in the open for all the world to see. No brainer for them to look into. They can turn on the tv daily and find a case per day.Reasonable compensation is a term that's generally applied to payments made to officers or shareholders. Have you ever seen the IRS apply it to someone without ownership or control?
Payments made in anticipation of future services (or in recognition of past services) are not gifts.
That part is clear. But if they’re paying player X $150,000.00 they better be able to justify why player X is worth that. Nobody in the real world is working a month of sports camps and making $150,000.00. That’s where a lot of these organizations will run into problems as the woman in the podcast mentioned talking about the value of the player.
Payments for future services would require these young people to give the money back when they transfer the next year. In what alternate universe will that happen lol
Disagree completely. Hope I’m wrong but I don’t think I am. Pretty sure it doesn’t matter if you’re a non profit or an LLC the payments can be looked at. Just think rich people who wanted to gift money to non family members would have them set up an LLC and pay them $250,000 to put one nail in the wall. That would never be allowed. This is the same principle.If that becomes an issue, it would really only be applicable for the non-profit collectives.
Agreed, which makes the idea of future services so ridiculous to begin with.Would be nice, but they're not structured as a multi year contract. We're basically getting 1 year deals and have to renegotiate each year.
Disagree completely. Hope I’m wrong but I don’t think I am. Pretty sure it doesn’t matter if you’re a non profit or an LLC the payments can be looked at.
Sure, so have spouses but those are related parties. Expanding the rule randomly to unrelated parties seems a reach.Owners overpaying their kids has been looked at.
Require, by who? Remember, in its current configuration NIL cannot be based on playing at a specific institution. So, so long as the kid does whatever the promotional work outlined in the contract is, he gets paid regardless of university affiliation.Payments for future services would require these young people to give the money back when they transfer the next year.
there are also rules for other types of entities.The rule is specific to non-profits so the donations they receive are used primarily for the purpose of the non profit. If a non-profit uses too much for salaries instead of what allowed them to qualify to be a non-profit, then they would lose their non-profit status.
Any non-profit NIL collective has to have a stated purpose other than paying athletes to qualify for non-profit status. They could offer payment to athletes in exchange for promoting charities for example but those payments could be viewed as excessive. There is no similar requirement by the IRS for the non exempt organizations.
"Unlike nonprofits, for-profit LLCs are not subject to a cap on what’s considered reasonable compensation. They may therefore offer student-athletes NIL work at any compensation structure. They are also not subject to limitations on the type of activities they can facilitate. Therefore, for-profit LLCs may facilitate NIL arrangements for student-athletes such as merchandising or endorsement deals that promote commercial activities."
Smart and hot. It is quite a combo.I've been saying this would happen for a year and a half or more.