Arky pays FAU's Davis $1 million

[Sean Miller Fan]

John Calipari lands biggest transfer portal star yet at Arkansas for huge NIL payment

Arkansas may have outbid the NBA’s interest in Johnell Davis with a big NIL deal for the transfer portal’s No. 1 ranked guard

www.sbnation.com

IU is paying Ballo $1.2 million.

These are all just marketing deals though. Definitely not pay for play.

 

[pittzap]

What a great recruiter.

 

[WillyDavis33]

Easy to hand out money!

 

[CbgPanther]

Other people’s money….

 

[Fsgolfdr]

Other people’s money….

The rule of business is always OPM ….other peoples money!

 

[pittjas]

John Calipari lands biggest transfer portal star yet at Arkansas for huge NIL payment

Arkansas may have outbid the NBA’s interest in Johnell Davis with a big NIL deal for the transfer portal’s No. 1 ranked guard

www.sbnation.com

IU is paying Ballo $1.2 million.

These are all just marketing deals though. Definitely not pay for play.

I don’t understand this bit.

Is there anyone out there who doesn’t acknowledge this is all pay for play?

 

[Sean Miller Fan]

I don’t understand this bit.

Is there anyone out there who doesn’t acknowledge this is all pay for play?

Its not. Arkansas's collective will make much more than $1 million by having Davis do some Instagram commercials and showing up at a Food Bank a few times. Big big money in that.

 

[cruzer]

Maybe they can throw in debt forgiveness for his Ferrari.

 

[Sean Miller Fan]

Maybe they can throw in debt forgiveness for his Ferrari.

I dont understand how the IRS lets these collectives get away with losing so much money every year. I mean it seems like money laundering. I remember from tax accounting class something to the effect of a business has to make a reasonable attempt to make a profit and cannot be established to lose money (for tax purposes). These collectives cannot make money. There's no revenue stream. I dont get it.

 

[S.R.M.]

I dont understand how the IRS lets these collectives get away with losing so much money every year. I mean it seems like money laundering. I remember from tax accounting class something to the effect of a business has to make a reasonable attempt to make a profit and cannot be established to lose money (for tax purposes). These collectives cannot make money. There's no revenue stream. I dont get it.

It is called the hobby loss rule. You are allowed to lose all the money you want, you just can't deduct it for tax purposes.

 

[Fsgolfdr]

It is called the hobby loss rule. You are allowed to lose all the money you want, you just can't deduct it for tax purposes.

Plus the recipients of the money do pay taxes !

 

[bdhotkly]

They're set up as non-profits. They're also not "losing" money since they have to take it in first before they can distribute it.

 

[TheWerewolfFromTwilight]

I dont understand how the IRS lets these collectives get away with losing so much money every year. I mean it seems like money laundering. I remember from tax accounting class something to the effect of a business has to make a reasonable attempt to make a profit and cannot be established to lose money (for tax purposes). These collectives cannot make money. There's no revenue stream. I dont get it.

Yeah, seems like there are a few different factors at play.

Hobby Loss rules exist so somebody can't deduct their personal recreational expenses and call it a business. Like if I'm into motorcycles and spend $50k/year on things pertaining to them, I can't give a few lessons here and there that total $10k and then just deduct $40k on my tax return every year.

So I'm sure some of these guys are playing it safe and just flat out not deducting the payments if they're from some LLC they've established or something and they're not bringing in any revenues pertaining to anything a collegiate athlete would have something to do with. IRS wouldn't care about that, because they're taxable to the recipient so it's a net win.

For a collective like Alliance 412, I assume they have some non-profit status and basically operate at a breakeven. I know they pay wages to at least some of the people affiliated with it, so those are obviously taxable (in addition to the distributions to players, though most are probably below the standard deduction anyway).

But then you have these established companies like Tyson, FedEx, etc. That one kind of confuses me. Maybe not so much from a tax standpoint (deduction on one side; income on the other side... though obviously they're in different tax situations so it's not a net zero), but definitely from a duty to shareholders standpoint. Some of these payments are like 50x above fmv.

But, I concede that people a lot more knowledgeable than me have this all figured out or else it wouldn't be happening out in the open as it is.

 

[Sean Miller Fan]

Yeah, seems like there are a few different factors at play.

Hobby Loss rules exist so somebody can't deduct their personal recreational expenses and call it a business. Like if I'm into motorcycles and spend $50k/year on things pertaining to them, I can't give a few lessons here and there that total $10k and then just deduct $40k on my tax return every year.

So I'm sure some of these guys are playing it safe and just flat out not deducting the payments if they're from some LLC they've established or something and they're not bringing in any revenues pertaining to anything a collegiate athlete would have something to do with. IRS wouldn't care about that, because they're taxable to the recipient so it's a net win.

For a collective like Alliance 412, I assume they have some non-profit status and basically operate at a breakeven. I know they pay wages to at least some of the people affiliated with it, so those are obviously taxable (in addition to the distributions to players, though most are probably below the standard deduction anyway).

But then you have these established companies like Tyson, FedEx, etc. That one kind of confuses me. Maybe not so much from a tax standpoint (deduction on one side; income on the other side... though obviously they're in different tax situations so it's not a net zero), but definitely from a duty to shareholders standpoint. Some of these payments are like 50x above fmv.

But, I concede that people a lot more knowledgeable than me have this all figured out or else it wouldn't be happening out in the open as it is.

Tyson Foods isnt paying players. John Tysoj is. Huge difference.

I was aware of the hobby loss rule but I guess I dont understand at what point a business isnt a business but a fraud or a front. I mean these collectives arent a whole lot different than some mafia laundromat whose sole purpose is to "clean" money. There is no attempt to make a profit at these collectives.

 

[BurghGuy68]

Lol thinking back I remember being appalled that Alabama supposedly gave Robert Foster's dad $100K the night before he announced. Now it's $1M being given to these players. Thanks Biden.

 

[TheWerewolfFromTwilight]

Tyson Foods isnt paying players. John Tysoj is. Huge difference.

I was aware of the hobby loss rule but I guess I dont understand at what point a business isnt a business but a fraud or a front. I mean these collectives arent a whole lot different than some mafia laundromat whose sole purpose is to "clean" money. There is no attempt to make a profit at these collectives.

I think the big payments are not coming from collectives; they're coming from specific donors.

 

[Sean Miller Fan]

I think the big payments are not coming from collectives; they're coming from specific donors.

Filtered through the collectives though. Like John Tyson just cant give Theiro a check for 750. That's straight up pay for play. It has to go through the collective and then when Thiero films a commercial for IG and visits and animal shelter, they say that's their 750K marketing expense.

 

[TheWerewolfFromTwilight]

Filtered through the collectives though. Like John Tyson just cant give Theiro a check for 750. That's straight up pay for play. It has to go through the collective and then when Thiero films a commercial for IG and visits and animal shelter, they say that's their 750K marketing expense.

Why would it have to go through a collective? These payments were being made when some schools didn't even have collectives.

 

[NCPitt]

I dont understand how the IRS lets these collectives get away with losing so much money every year. I mean it seems like money laundering. I remember from tax accounting class something to the effect of a business has to make a reasonable attempt to make a profit and cannot be established to lose money (for tax purposes). These collectives cannot make money. There's no revenue stream. I dont get it.

What are you talking about?

The collectives get contributions from members, use the funds to cover their expenses, and then pay the remainder to student-athletes. There is no loss and there is no requirement to make a profit.

As usual, you are spewing nonsense.