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Golf Outing earned income - mulligans

  • 1.  Golf Outing earned income - mulligans

    Posted 06-23-2021 09:29 AM

    My understanding is that mulligans or payments to hit from a closer tee at a charitable golf outing are not tax deductible gifts, but does anyone have a link to an IRS document showing that?  I can find info on games of chance, lotteries, etc.... but is there anything specific about this unique type of 'donation'?  We had an outing in which players were told if they donated money to a scholarship they could hit from a closer position to the hole.  However, I'm seeing this as equivalent to mulligans, which we always count as earned income.  But, I'm getting the argument now (due to this new scenario) that this isn't a game of chance and there is no benefit to the golfer/donor because there is no prize money at the end of the outing for the 'winner' of it (they do get a trophy), so the 'donors' should get a tax receipt. 

     

    If someone has something in writing, or if I'm understanding incorrectly, can you please help me out?

     

    Lisa

     

    Lisa S. Geiersbach

    Director of Advancement Services

     



  • 2.  RE: Golf Outing earned income - mulligans

    Posted 06-23-2021 09:56 AM
    It is a purchase, Lisa.  The donor is receiving something of equal value in exchange for their payment.

    Now, if a mulligan "cost" $5 and the individual voluntarily paid $10, then the extra $5 would be a gift.

    John

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987






  • 3.  RE: Golf Outing earned income - mulligans

    Posted 06-23-2021 11:01 AM
    Lisa, I think I'd respectfully take the opposite approach to John, at least as regards no-prize contests.

    I've seen many golf tournaments that offer full tax deduction for mulligans, because, in the absence of any prize, a mulligan has no value. If we try to set an FMV on a mulligan, how can we do so? If I'm playing a round of golf, and say I paid $100 for the round, if I take a mulligan during play, I'm not charged anything at all. In the context of the commercial transaction, it seems reasonable to say that at least a couple of mulligans over the course of play are included in my purchase. If I play two balls on each hole, I'm likely to get in trouble (or not, if the course isn't busy and the starter doesn't care...), so perhaps there's some line between a handful of mulligans and many mulligans, but it's still really marginal. 


    Note that the EFCA (an advisory group to Christian ministries) takes this position here, at the bottom: https://www.ecfa.org/Content/Golf-Outings

    To my mind, hitting from a closer tee is even less valuable. If you came to play the course on a regular day, you can hit from the pro, men's or women's tee, for the same $100, and unlike the mulligan situation, where perhaps many mulligans might have some minor value, in this case, it is fully your right as part of your purchase of the round of golf, to hit from any tee. Analyze it this way: let's say you charged $250 (on that same $100 FMV course) to hit from the closer tee, but charged $200 to hit from the farther tee - instead of selling the 'hit from closer' as an upgrade. In both cases, the FMV of the round of golf is $100, right? 

    Unless there is a prize at stake, which makes the advantage have some monetary value, I don't see how changing where you hit the ball from is a benefit of any monetary value beyond what was already priced into the greens fees. The only "value" is the potential to improve your score in a tournament, which is not an economic benefit. 


    Thank you,
    Isaac Shalev
    CRM Expert
    Sage70, Inc.
    (917) 859-0151
    isaac@sage70.com

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