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INTERNAL REVENUE SERVICE UPDATE (Tuesday, June 12, 10:30- 11:30 A.M.)


The Internal Revenue Service Update is the title of our presentation today. I assure you it has nothing to do with you personally, perhaps that will make you feel better. We have not used public records law in your respective states to be able to ascertain the facts surrounding your own standing with the Internal Revenue Service. We are principally concerned with the attitudes and actions of the IRS with its ruling 84-132 which, could very well affect our individual intercollegiate athletic programs, and our methods of encouraging contributions from our donors. This situation is quite fluid as you know. Perhaps some of you have had the opportunity to deal with your state representatives who are in the U.S. Congress and 'have encouraged them, as I have, to make certain that the rulings were consistent with our best interest in intercollegiate athletics. I hope you'll continue to do tha because that certainly is vital to our future.

We thought the best thing we could do in order to make certain that we were current with our information was to bring in legal counsel from Washington, D.C. We are very privileged to have with us today, our first presenter on the panel, Mr. Michael Scott, who is with the law firm Squire, Sanders and Dempsey, located in Washington. Mr. Scott is NCAA counsel in Washington for many respects. Mr. Scott is a graduate of Cornell University with a BA in liberal arts in 1952. He then served three years in the U.S. Navy, whereupon he went to the University of Michigan Law School and received his jurisdoctorate degree in 1958. He studied a year in Switzerland and the Graduate Institute of Inter- national StudieS on international law and then joined the law firm of Squire, Sanders and Dempsey in 1959, where he has been eversince. It is my great privilege to give to you Mr. Michael Scott.


Thank you, Bill. I've already figured out that lawyers aren't too popular on this program. I was privileged to be here for the first part of the program, so necessarily, I will keep my remarks short so I can get out of here alive. I thought I would, since I'm the leadoff speaker here, remind you of the story of the doctor, engineer and the lawyer who were sitting for cocktails one evening. They got into a discussion of which was the oldest profession. The doctor lead off and said that obviously min~ is because he was created out of Adams rib, and that happened a long time ago. That was a surgical procedure and, therefore, obviously, we are the oldest profession. The engineer said, no, no, no. As we all know, the Lord in seven days created the universe out of all the chaos and confusion. That was the greatest engineering feat of all times. That came much before Adam and Eve and, therefore, we are the oldest profession. The lawyer paused and looked at them and said, "and who do you think created all the chaos and confusion?"

I'd like to speak to you this morning on not one, but two initiatives of the Treasury Department having a potential impact on the raising of funds for college athletic programs. First, I'll discuss the now withdrawn but still very much alive Revenue Ruling 84-132, dealing with charitable contributions in connection with ticket purchases. Then, briefly, I want to draw your attention to the possible implications for your institutions of one of the provisions of the President's Tax Reform initiative now being studied by the Congress.

Late last summer the IRS issued Revenue Ruling 84-132, in essence holding that a contributor to a college athletic scholarship program who received, in return for his contribution, the right to purchase preferred location seats in the football stadium, could not deduct any part of his payment for the scholarship program as a charitable contribution. Now, bluntly stated, this ruling called into question the viability of fund raising practices on the part of a large number of NCAA member institutions. The resulting hue and cry in the Congress was sufficiently strong to cause the IRS to take a very unusual step. Under pressure principally from Senator Dole, then chairman of the Senate Finance Committee and now, of course, majority leader, the IRS agreed in mid-October to withdraw the ruling and to provide the opportunity for written comment and for public testimony on the implications of the ruling. Hearings were held in early January of this year, and five months later we were still awaiting the IRS' next move on this issue.

Let me first put the matter into the context of traditional tax law. Section 170 of the Internal Revenue Code permits a taxpayer to take a deduction for federal income tax purposes for contributions made to a charitable organization; in this case an educational institution. As interpreted by the Supreme Court many years ago, a transfer of money or property to a charity qualifies for treatment as a gift or charitable contribution, only if it proceeds from "detached and disinterested generosity;" not if it proceeds from "the incentive of an anticipated benefit" of an economic nature. Those are important words for our present purposes --not if it proceeds from the incentive of an anticipated benefit of an economic nature. Acting on these principals, the IRS in 1967 issued a ruling. Revenue Ruling 67-246, dealing with cases in which a contributor to a charity received or qualified to receive some form of economic benefit in return. In such a case, the IRS said, there is a presumption that the value of benefit is at least equal to the contribution, meaning that no part of the charitable contribution is deductible. It is up to the taxpayer to overcome this presumption and show that the value of the benefit is less than the amount of the contribution. To the extent that the taxpayer can do so, he will then be entitled to a charitable contribution for the difference. That is for the amount by which his contribution exceeds the value of the benefit received.

Now in most cases, this kind of calculation is relatively simple. Suppose the local charity hospital contracts with a movie theater to buy up all the seats for an opening night performance of Ghandi. It then set a promotion by which hospital supporters, can in exchange for a contribution to the hospital of $50, obtain two tickets for the performance. Is the whole $50 tax deductible? No, says the IRS, because the taxpayer is getting a benefit in return for his gift, two seats for Ghandi, which at any other time in the community would cost him, let's say $5.00 apiece. Instead of the $50 deduction, the IRS agent is going to allow only $40, the difference between the amount of the contribution and the fair value of the benefit received. Remember, it's up to the taxpayer, not the IRS, to establish the value of the benefit received. If he doesn't, or can't do so, the the presumption is that the value of the contribution is deductible.

This then brings us to Revenue Ruling 84-132. The facts dealt with are as follows. An individual taxpayer made a payment of $300 to a particular athletic scholarship program maintained by a university. This payment entitled the taxpayer to become a "member" of the program. The only benefit afforded members was that for an additional $120, they were permitted to purchase a season ticket to the university home football games with preferred seating. Preferred seating meant merely that the season tickets would be for a seat between the 40 yard lines. No tickets for seats between the 40 yard lines were available to non-members of the program. There were indeed approximately 2,000 people on the waiting list to become members, and a person could become a member only when a season ticket between the 40 yaJ;d lines became available. on these facts the ruling concluded that no part of the $300 payment was deductible as a charitable contribution. Why? Because in return for his contribution, the taxpayer had received a benefit -the right to purchase a ticket between the 40 yard lines. In light of the fact that the program was the exclusive means for obtaining such a ticket, and 2,000 people were waiting for th opportunity to pay their $300 and qualify for the right. The taxpayer simply could not overcome the presumption that the value of the benefit received was at least equal to $300.

Now there are several problems arising out of the Revenue Ruling, but perhaps the most important is the fact that unlike my Ghandi theater party illustration, we are here dealing with an intangible benefit; not two seats to a theater, but the right to buy a season ticket between 40 ya~d lines. Let's accept the fact that the burden is on the taxpayer to show that the benefit received is less than the contribution made. How does the taxpayer establish the fair market value of the privilege to buy a seat? As a practical matter, he can't. You can get a quotation from your stockbroker on options and warrants to buy AT&T stock, but at least so far, the commodities exchanges haven't established a market for the privilege to buy a 50 yard line season seat to watch a college football game. So the taxpayer is behind 8-ball to begin with. The next question, unanswered by the ruling, is whether the ruling applies more broadly than in the narrow factual context that I gave you. Remember that the facts were that the only w to buy that ticket between the 40 yard lines was to become a member of the club, and 2,000 people were waiting to join. What if there was no waiting list? Or stated otherwise, what if club membership were not the exclusive route by which to get tickets between the 40s? Does the taxpayer have the same valuati, problem? How is the ruling to be applied to numerous other preferred seating plans offered by the NCAA members for football and basketball?

It's clear that when in exchange for his contribution, the taxpayer gets a free ticket for free parking, the fair market of the tangible benefit normally easily measured, must be subtracted from the amount of the contribution to determine the true amount of the gift. But what about the other plans, by which points are accumulated over the years, depending on the duration and the size of the annual contributions? A greater number of points entitle a contributor to buy better or more seats. How do we value that kind of privilege. What kind of value is attributable to a program under which, as is probably commonplace, the taxpayer is guaranteed the right to buy a season ticket if he contributes a certain amount, and the availability of tickets to the public is determined only after season tickets unc the program are sold? Does the guarantee itself have some value? These are difficulh questions, but I don't think the picture is entirely bleak and certainly not as bleak as suggested by Revenue Ruling 84-1:

In December, the NCAA conducted a survey of it's Division I institutions to get a better handle on I characteristics of athletically-related fund raising programs. The response rate was high, over 68 percl of the Division I members returned the questionnaire. 77 percent of those institutions reported a fund raising program tied to a preferred-seating opportunity at their football or basketball games, annually raising about $41 million in football and $28 million in basketball. But, perhaps most significantly, 01 17 percent of those institutions indicated that a waiting list existed for participation in the program. I think this is very important because if no waiting list exists, then almost by definition, the season- preferred season tickets are available other than through the contribution program. If this is so, then a strong argument can be made that the privilege to buy season tickets through the contribution program has no measurable fair market value, indeed, except perhaps as a matter of convenience. It has no value at all. Therefore, the entire amount of the contribution is deductible. This is the position that the NCAA has taken with the IRS.

Okay, that still leaves us with the problem of the other 17 percent, where the contribution program is exclusive means of gaining the privilege where a waiting list may exist. We have argued to the IRS thl it is unfair to place on the taxpayer the burden of establishing the value of the privilege, where unU the cost of the Ghandi opening night performance, it is essentially impossible to place a value on the privilege. There is simply no marketplace, other than perhaps a scalpers market, in which the privile! is bought and sold. Remember, we are not talking here about the value of the tickets themselves. We I talking about the value of the privilege to buy the tickets. We recommended to the IRS that in the grE scheme of things, given the unfairness of the burden placed on the taxpayer, the privilege even in the! circumstances is of no significant measurable market value and should simply be disregarded for tax purposes. In candor, I doubt the IRS is going to buy this recommendation. But, I do believe there is reason to hope the IRS is going to be relatively restricted with respect to the situations in which it will apply the requirement that the taxpayer establish fair market value of the ticket privilege.

Since the January 7th hearing at which John Toner, as NCAA president appeared on behalf of the NCAA, we as NCAA counsel have met with treasury and IRS representatives, as have members of the America Council on Education. Although nothing is certain at this point, it's rather clear that the IRS intends to issue a revised revenue rule, probably covering a multiplicity of fact situations. The revised ruling will attribute fair market value to the ticket privilege, probably only in very narrow, sold-out circumstances. Indeed, there is at least some reason to hope that the privilege to buy tickets through a contriubtion program will be deemed to have value, only when the entire arena or stadium is sold out. And there are very few institutions, I would speculate, except in basketball, where that is commonplace.

The fact is that in a real sense, the IRS has a tiger by the tail with respect to the ticket privilege issue. And the further fact is, there is not a great deal of federal revenue involved in the means by which the issue is resolved. I can't predict for you when the revised ruling will be issued.

I talked with the treasury last week in anticipation of these remarks, and although I gained the impression the staff had reached agreement on the principles of the revised ruling, the necessary review process was still incomplete.

In the last analysis, this exercise with respect to Revenue Ruling 84-132, is probably important for reasons unrelated to the precise manner in which the IRS resolves the issue of calculation of ticket preference. What the issue of the ruling and its withdrawal have done is to focus the attention of university administrators allover the country on the rather clear tax principles involved in granting privileges or benefits in exchange for charitable contributions. I was interested a couple of weeks ago to read the Washington Post that some colleges are providing alumni and others, in exchange for donations, with access to the college's athletic and exercise facilities. Rather clearly this raises as much of a question under traditional tax principles as do the terms of Revenue Ruling 84-132.

I guess my overriding advice to you is that in the development of athletically related alumni giving programs of any magnitude, counsel to your college or university should be consulted. Not only would this permit the development of a defensable plan, but it would also limit the possibility of your having on your doorstep an angry alumnus who's athletically related charitable contribution has been disallowed on audit. Better to tell your alumni up front. It seems to me that they can deduct only a defined portion of the gift.

Now all of the foregoing assumes that after the Congress gets through with the Administrations new tax simplification plan, charitable contributions to educational institutions will be continued to be deductible in future years. Contrary to the first treasury proposal, which would have disallowed a deduction of a charitable contribution, it does now appear that the deductibility of charitable contributions will emerge from the current legislative process relatively unscathed.

But, it's reported in the June 5th issue of the NCAA News, there is another feature of the administration's plan that may spell trouble for a number of institutions. That is the proposal severely to restrict deductions for business entertainment. I'd like to talk to you about that for a minute. Under the treasury proposal now before the Congress. no deduction would be allowed for entertainment activity expenses, except essentially where the expenses are reported as income by the person or persons benefiting from the entertainment. As I read the proposal, this would mean that corporate purchases of boxes or season tickets at college sporting events. whether for the benefit of employees or customers. would not be deductible unless those attending the event reported the value thereof as income. Under present law, business entertainment expenses for tickets to sporting events or theatrical events are deductible if they are directly related to or associated with the taxpayers business. Without doubt, the IRS is having difficulty in drawing the line under these fairly subjective tests. The current treasury proposals would simply avoid the problem by denying the deductions in most cases. As you might anticipate, the professional leagues are deeply concerned by this proposal. Corporate purchases represent between 30-50 percent of the ticket revenues to teams in major professional leagues. Denial of the entertainment expense deduction could have very serious adverse consequences on the economic viability of a number of professional franchises and ind~ed the facilities in which their games are played. Neither the NCAA nor I have any real idea of the extent of which its members benefit from ticket purchases involving business entertainment. but each individual institution can probably easily determine what proportion of season tickets are purchased in a corporate name. What proportion of these purchases represent business entertainment expenses? It is probably impossible, as a practical matter, to determine. But I think it naive to assume that a large percentage of these purchases are not written off as business expenses. It may well be that some institutions have a significant interest in this issue. If so. they may well wish to make that interest known to their respective legislators in Congress. Particularly important in this respect are the members of the Ways and Means Committee of the House and the Finance Committee of the Senate.

It is my present understanding that due to its lack of any solid information on this subject, and probable wide variety of impact on its members, the NCAA counsel does not plan to offer any testimony in Congress on this proposal. Each of you may thus wish to consider, with the administration of your institution, whether you wish to contact your Senators and Congressman on the matter. If you do wish to act, I suggest you do so very soon, because hearings on the tax simplification proposals are now underway in both the'Finance Committee and Ways and Means. At least publicly the administration is pressing for rapid considerations of its proposals. I regret that I cannot be more upbeat in the news that I bring you from Washington, but as the stereotyped IRS agent is often quoted as saying when he knockes on your door, I am only here to help you. Thank you very much.


You did get our attention, Mr. Scott. Thank you very much. We would like to hear from an institutional level now as to some of the activities and perspectives that are projected. Dave Hart is the athletic director at the University of Missouri. Prior to that he was at the University of Louisville. An individual who has been involved a great deal in the promotional aspects of intercollegiate athletics, Dave is going to give us the Missouri perspective at this time.


Bill asked me on short notice to participate on this panel. The reason Bill asked me, is because at the University of Missouri we do not claim contributions based on benefits as tax deductible. We haven't been permitted to put it in our literature and we haven't. When the tax situation started creep- ing upon us of late, we were kind of glad that we didn't. Because of that reason, Bill knowing what our policy has been since 1979, asked me to speak to you to tell you what affects it might have had on our fund raising efforts, and how our legal people at the University of Missouri viewed the situation. When I went to Missouri in 1978, they were giving tickets to donors. If you donated $250, you received two season tickets. If you donated $500, you received four. If you donated $1,000 to what they called at the time, the Athletic Scholarship Program, you received eight tickets. I lived with that system for one year because it was already in affect when I went there. I didn't like it for two reasons. one, I thought it had some ramifications with the IRS, and I talked to many legal people about it. And two, I just didn't believe that you ought to give tickets to donors for donations. I thought it was losing money. He's getting back almost what he gives. Tt just wasn't right. So I visited with our legal people and they agreed. The funny thing about it is that they put in literature that the contributions were tax deductible yet you were getting tickets in return. It was really a hairy situation, so we decided at the time in 1979 to scrap what they were calling the Athletic Scholarship Program.

We initiated a new program called the MASA, Athletic Scholarship Associates. We had pins and hats and shirts and everything to identify contributors. We also initiated a policy that contributions were based over and above the price of tickets. You had to pay for your tickets. We also put in the prime seating program, and I don't have to tell any of you here in Division I what you go through. It's pure Hell. It doesn't matter where you are, when you're looking for the profit books and asking the people to contribute based on benefits, they don't like it. They liked it before bacause it wasn't a general policy. People weren't told they had to contribute for sitting in prime seats. It was kind of a hit and miss situation. They were raising somewhere in the neighborhood of $250-$300,000.

We now raised $2.2 million this past year and thank God we did. Thank God we have a policy that says you have got to contribute. It's not easy. In fact, you almost lose your job on it. I had to go before the state legislature to explain to them why we had a ticket policy based on contributions and benefits in return. We received no state money at the University of Missouri, not one dime. No student fees. We have to generate the $8.8 million for our budget. We generate all of our own income. So, with fund raising we've generated $2.2 million on an $8.8 million budget. You're looking at almost 25 percent of our income comes from fund raising. The state legislature had the guts to ask me to come and speak to them of why we were doing this, when they weren't giving us any money anyway. So we did, and naturally, many people dropped out of the program. They just didn't want to give. They thought they had the law behind them. They knew all the tax problems. They were telling us they were going to take us to court. They would challenge this on a tax deduction basis. So our legal people said, we cannot let you put in the literature that it's tax deductible. We put that it's up to you and your accountant to decide whether you want to claim these benefits or not. You pay for the price of the ticket and your contribution is over and above that. Now it becomes a personal matter with you and your tax accountant. It hurt us. The first yeB or so, it hurt us because many people were afraid. They said if they are not going to get ta~ deduction credit, why should they give?

I would say that in 1979, it had a little negative affect, but I would say that since then, we feel that maybe it's been helpful in that respect -the fact that we don't put it in literature -the fact that we leave it to the individual. In the last year or so when all the tax things were creeping upon us, we felt like perhaps we were ahead of the game. I would say that we have steadily increased our fund raising efforts, so I don't think it has hurt us over the last four to five years. The one thing we do too is, aru I think the NCAA has looked favorably upon this is, all contributions that we get are made to the Universil of Missouri. They are not made to the NADAathletic scholarship associates. They are made to the university and go through our c~mpus development office.

Our fund raising people are located physically in our athletic department and they report to me. We work coordinately with the university's development office. Checks made out to our MASA athletic Scholarsl Associates. If they are made out that way, they are still deposited through our development office at the university. There is an account for the athletic department that gives us credit. That's the way we work it here. We feel the NCAA looks favorably upon that. We think the alumni look favorably upon that.


Thank you Dave. We did want to hear from Dave because we were aware of the fact that the University of Missouri has taken that position. We know that there are many schools around the country that don't take that position. I know about one very well, the University of Florida. It seems to me inconsistent with the national direction of our executive branch of government, that the IRS would make such a stringent ruling. I know that sounds like a coloquial way to express my attitude, but I'm very serious. We have a national government that has given us the direction of deregulation of self-help; of all of us taking care of our individual responsibilities and not looking to Washington, D.C. to solve all our problems. If we lose the incentives that come to us now through the deduction process, it's going to have a very serious impact on many of our programs. I can speak directly to what would happen at the University of Florida, where we are able to raise about $4 million a year through our organization called Gator Boosters. Ninety- eight percent of those contributions are related to preferred seating. Ninety-eight percent of those dollars are related to football preferred seating. To say it is vital to us is an understatement. We do proclaim tax deductibility at the University of Florida, and historically have done so. We will change that if it's necessary to do it, but as I say, we hope that is not necessary.

Since the early 1950s,several principles have been in place at the University of Florida. First of all, the tickets have not been included in the contribution. As Dave has alluded to, I think that is one way of doing it. We have not done it that way at our institution, thank goodness. But we have had the individuals make two separate checks; one check payable to the University Athletic Association for the value of the season ticket, and that check amount is not tax deductible, per our literature. They make a second check payable to Gator Boosters, Incorporated, which is tax deductible. There are two basic principles for that contribution that are pertinent to the individual. There is a per-seat contribution, depending on the location of the ticket. That individual has the right to reclaim that ticket the next year, that exact seat the next year, if he or she has made the contribution in the previous year. The individual establishes seniority for those seats.

There is one other thing that I would mention. We have seen something at the University of Florida that is pertinent to this. It's why I lost my breath a minute ago when Mr. Scott made his comment about corporations and luxury boxes. We have 28 such boxes at our football stadium, which have 12 seats apiece.

For an annual contribution of $30,000, an individual or corporation can use those boxes for their purposes. out of the $30,000, we identify $2,000 as being the licensing fee for the tangible benefits that accrued to the corporation or individuals using the box. That includes admission. We don't actually have tickets for those individuals, but we identify the admission value to the game. We identify the catering value and other types of tangibles. I would anticipate that probably 60-70 percent of those boxes are in the names of corporations at this time. obviously, the results of this would be very germane to us. I know in our part of the country, many other schools either have boxes or have them on the drawing board at this time. It's a very significant part of our revenue picture for the future, for about a 10-year period those revenues will amoratize the facility. After that they will click in as a new source of revenue for our athletic program, which is very vital to us. So to say that our institution has a vital stake in these rulings is an understatement.

I know you have concerns in this regard also, and so now we have a few minutes available to us for questions and answers. Mr. Scott is here in case there is something that he has said that would be of particular interest to you. I would like to ask you that, when you do have a question, you go to the near- est microphone and identify yourself and your institution so others in the room will have a frame of reference with regard to your particular question.


I'd like to address a question to Mr. Scott. I've heard information relative to the new tax laws as it pertains to courtesy cars, that we all use in our athletic departments. There's a new regulation that is going to become in effect this coming year that is going to say you have to identify a value for the use of that car. Let's just say that for a 12-month period of time, $200 per month or $2400 per year; and that the coach has to determine or add that as income, is there any truth to that?


I'm not precisely up-to-date on that particular issue, but I believe I am accurate when I say that that regulation which was proposed has been withdrawn. The treasury is currently studying what it wants to do with that, but please don't take what I just said as being definitive. That is my impression. I simply have not followed that issue. I'm told here by a man who maybe knows better than I do, because he has a personal i~terest, that it has been withdrawn.


At the University of Florida, we're told by our auditor four years ago that we had to claim a value and we issue a 1099 for each of us for approximately $2500, the value of a car. It's between us and the Internal Revenue Service. in terms of the personal value that we claim as opposed to the business value. also have to claim the value of the insur~nce that we provide on that automobile for that individual. Ii about a $3.000 value total. That is a 1099. We didn't like to do that. but when our auditor said we sh, do that. I didn't want it to be my responsibility.


Has the NCAA, on the stance that you stated earlier about the people other than the 17 percent who have waiting lists, put in writing the stance or the opinion of the NCAACouncil? If so, can we obta:in a copy of that to take back to our schools?


The answer to the first half of the question is yes, I have a couple of copies in my folder of John Toner's statement to the IRS. I think probably the best thing I could suggest is, if anybody wants to write to me, or for that matter, the NCAA office, which is probably easier, they can get a copy of the statement which John made to the service representatives in January. That represents the NCAA's position.


On the issue to access to university facilities, I'm thinking specifically of intramurals and golf courses, where a donor to your university would have the privilege of playing at an alumni rate, even though he wasn't an alumnus.


I don't think it's a question of whether he's an alumnus or not. I think the question as far as the tax issue is concerned, is whether that benefit to use that university course has some measurable valu, Let us jusy say, for the sake of argument, that your university course charges the public $8 a round, but you've said any contributor who gives $1,000 to the university can play free. As far as I'm concerned, technically only $992, if he plays once a year, is deductible. But, I don't think the issue of whether he's an alumnus or not an alumnus is the issue. The issue is what value is the benefit that he's receivel The cases I was alluding to were cases involving institutions around the Washington, D.C. area, where the: were allowing probably three institutions allowing alumni contributors to use free their athletic facilities; their track, exercise rooms, swimming poo~, and so forth. Clearly, that has some value, and probably relatively easily measurable.


You've still got value. Somebody alluded to the fact that at Missouri you'll give away hats, shirts and so forth. Those things have value. They are negligible value and the Service is normally going to ignore that, but if you want to take this principle to its ultimate extreme, you would take the fair market value of that t-shirt and deduct it from the amount of contribution.

Even if the public didn't have use of that?


Concerning matching gifts, many of us athletic fund raisers are losing now a greater amount of money because of the few corporations that now refuse to match a gift that has been designated for your athletic scholarship program. Is the NCAA making a proposal or trying to help these schools in claiming that this is a student-athlete who is getting a well-rounded education, and if they'll match a gift to th band or to the chemistry department, why should they pick on the athletic department?


I think I'll duck on that. You've got the president and the immediate past president sitting in the audience. I think you ought to ask them. But, I will say this; the comment was made here, I think with respect to Missouri, that ticket-related contributions were made to the university itself and not to the ~thletic program, not to the booster program. I want to make it clear for all of you that while, for purposes of university relations, that may very well be at many institutions a good idea fDom a tax perspective, it does not make any difference. If the booster club is a 501 C3 tax exempt charity, which is taking all of its net receipts and turning it over to the university, a contribution to a booster clut is as valid. Forget about how much it is. The contribution to the booster club is as valid a charitable contribution as is a contribution at the University itself. I can well understand however, as a matter c university relations, that many universities will determine that they want their funds to come directly into the university general fund. The NCAA survey, if I get a chance to sit down here I will look it up, but the NCAA survey shows a fairly widely varying practice among Division I schools on whether the funds go to the athletic department, and athletic scholarship fund or to general university funds.

I just want to say that, with respect to this business entertainment issue, you really ought to take that seriously. There are many in Washington who speculate that tax implication is a difficult job, and of course, everybody's ox is being gored by this bill. I don't care what walk of life you come from, you have problems with the new bill. It has many facets to it. If your institution, such as apparently at the University of Florida, these corporate buiness entertainment purchases are significant parts of your program, you may very well want to get in touch with your legislator and make it known that it's a problem. At least on the surface this is currently being viewed in Washington as a problem involving professional athletics, not necessarily involving the colleges. I don't think the NCAA has any idea of the extent of which business entertainment expenses are applicable in the college area. Clearly, they are to some extent, at many institutions. You really should take this seriously, particularly if the member of Congress in your area is a member of the Finance Committee or Ways and Means Committee.


I would like to express our appreciation to Mr. Scott and to Dave Hart for being our panel members today.

Our next session.begins in this same room at 11:30 on the subject of the injuries in intercollegiate athletics.