Federal tax law eliminates deduction for some Army-Navy fans
By RACHAEL PACELLA | The Capital (Tribune News Service) | Published: February 6, 2018
Last year more than 2,000 people used their membership in the Naval Academy Athletic Association’s Blue-N*-Gold club to gain priority access to Army-Navy football tickets.
They made a charitable contribution to the NAAA in exchange for membership in the club, which supports Navy sports. Then they were able to deduct 80 percent of that contribution from their taxable income, reducing the money they owed the federal government.
But they won’t be able to make the same deduction this year. The Tax Cuts and Jobs Act of 2017 eliminated a person’s ability to deduct their contribution if it is tied to seating and ticketing.
Around the country, college sports programs have raised concerns about the tax law, both for the loss of the deductions and for an excise tax that could make highly-paid coaches even more costly. NAAA officials also say fans who buy the 300 luxury seats at Navy-Marine Corps Memorial Stadium will lose their deductions, and they’re waiting to see if football head coach Ken Niumatalolo’s compensation will be affected by the new law.
Naval Academy director of athletics Chet Gladchuk said the majority of Blue-N*-Gold members might not care about the loss of the deduction.
“We just don’t know how it’s going to break out,” he said.
Last year 4,700 people were members of Blue-N*-Gold. Spokesman Scott Strasemeier said 52 percent of members purchased Army-Navy tickets in 2017.
There are five levels of membership — 1 Star, 2 Star, 3 Star, Vice Admiral’s Row and Admiral’s Row. To become a member you can donate as little as $125 or as much as $2,500 and up. The required contribution for the top tier membership also increased from $1,000 to $2,500 for 2018.
“We use those membership levels to determine ticket priority to Army-Navy, so anyone purchasing those tickets will no longer be able to claim charitable credit for their membership contribution,” Strasemeier wrote in an email.
Unlike other schools, membership in Blue-N*-Gold isn’t connected to better seats at home games — just neutral site games, like Army-Navy, which is played in Philadelphia most years.
“Anybody can buy a ticket regardless of membership status in any part of the stadium other than Akerson Tower or a suite,” Strasemeier wrote.
So, if a Blue-N*-Gold member doesn’t buy tickets to Army-Navy or other events with special access, their donation might still be deductible.
“Our first response is for someone to consult their personal tax adviser, but yes, any Blue-N*-Gold contribution not associated with ticker priority is considered a charitable contribution,” Strasemeier said.
Last year’s member benefits also included priority ticket consideration for away games — that item is removed from this year's list, Strasemeier said.
Strasemeier said members have been told they will lose their deduction if they buy tickets to Army-Navy or other neutral site games.
Season ticket renewals for the 2018 football season begin Feb. 12.
At Navy-Marine Corps Memorial Stadium, 300 seats are available in the Clubs at Akerson Tower, which also includes an indoor area with complimentary food and drinks. Tickets to the Clubs require a $5,000 donation. Now, 80 percent of that donation is no longer tax deductible.
The law could also cost the NAAA tens of thousands of dollars if Niumatalolo’s compensation is subject to a new 21-percent excise tax on compensation in excess of $1 million.
Niumatalolo’s compensation package is approximately $2 million, based on multiple published reports.
Gladchuk said it isn’t clear if the NAAA will be taxed for Niumatalolo’s compensation because the contract was reached before the law went into effect.
“Twenty-one percent on anything is going to be a challenge for a nonprofit like the NAAA,” Gladchuk said.
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