John Francis Mahoney Law

06/03/2019

Important Tax Information Regarding Promotional and Advertising Expenses Relating to the Sponsor of Sports Teams.

Have you wondered what it takes to deduct the costs of sponsoring a sports team? What if you play on the team? Could you pay for the team travel expenses?

Revenue Ruling 70-393 provides that the monies spent to outfit and support a sports team are similar to monies spent on other methods of advertising or promotion of your business; accordingly, you may deduct them as business expenses for federal income tax purposes.

In the Strong case, Strong Construction Co. Inc. advertised its business primarily through either word of mouth or athletic sponsorships. As part of the athletic sponsorships, the corporation paid for the uniforms, logo design, hats, T-shirts, sweatpants, coats, bags, and pants for all players on its sponsored teams (broomball, softball, wrestling, etc.).

The court ruled that the expenses were ordinary and necessary business expenses and that Strong could deduct them as advertising or promotion.

In the Bower case, James Bower sponsored the Lafayette Bower Housing Hustlers basketball team, and he was both an assistant coach and a player.

As the Hustlers’ sponsor, Bower paid for the team’s travel, lodging, food, promotions, AAU fees, tournament fees, gym rental, and uniforms. The court noted that Bower’s sponsorship increased his commodity brokerage commissions and generated additional clients; accordingly, the court ruled that Bower’s sponsorship expenses were deductible business expenses.

If you are thinking of sponsoring a sports team and would like to discuss the sponsorship tax implications or any other tax or corporate matter, please call me on my direct line at 312-924-4245 or by e-mail at [email protected].

This Article is adapted from an article authored Bradford Tax Institute, Copyright 2019 and republished with the permission of the Bradford Tax Institute as a paid member at

See More Testimonials from Business Owners...

06/03/2019

Profit sharing plans are a powerful tool for small businesses.

Ted Benna can teach you a tip or two about maximizing your 401(k). He invented them after all. He says you're likely not taking full advantage.

11/14/2018

Adding a friend or child to a bank account so that your friend or child can assist you in paying your bills and managing your affairs can have unanticipated consequences and derail the intent of your estate plan. A Joint tenancy account passes by law to the surviving joint tenant outside your estate plan. The Illinois Statutory Power of Attorney for Property is the best way to provide a trusted friend or child the power to assist you with your affairs. You can determine which property and powers you are willing to provide to a trusted friend or child.