College Athletics and the Tax on Unrelated Business Income: Will ‘Student Athletes’ Still Be Students After the NCAA Changes Its Rules?

Journal of Taxation of Investments, Winter 2020, at 59

Case Legal Studies Research Paper No. 2020-17

Posted: 22 Oct 2020

See all articles by Erik M. Jensen

Erik M. Jensen

Case Western Reserve University School of Law

Date Written: December 2020

Abstract

This article considers the effects of the California Fair Pay to Play Act—permitting a student athlete at any California college, beginning in 2023, to profit from income generated by the athlete’s “name, image, or likeness”—and the NCAA’s apparent acceptance of that principle on the liability of big-time athletic colleges for the unrelated business income tax (UBIT). College athletic teams historically have not been subject to UBIT because of the pretense that the participants are student athletes. Although the Fair Pay to Play Act and the NCAA’s response might not yet require discarding that pretense, the probable next step—direct compensation by the colleges, beyond scholarships, for participation in athletics—will make characterization of many athletes as “student athletes” untenable.

Keywords: unrelated business income, unrelated business income tax (UBIT), college athletics, student athlete, National Collegiate Athletic Association, Fair Pay to Play Act

JEL Classification: K34

Suggested Citation

Jensen, Erik M., College Athletics and the Tax on Unrelated Business Income: Will ‘Student Athletes’ Still Be Students After the NCAA Changes Its Rules? (December 2020). Journal of Taxation of Investments, Winter 2020, at 59 , Case Legal Studies Research Paper No. 2020-17, Available at SSRN: https://ssrn.com/abstract=3715830

Erik M. Jensen (Contact Author)

Case Western Reserve University School of Law ( email )

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