IRS getting involved in the NIL?

[37620VOL]

I'm not a tax expert by any means but I thought the "way to do NIL" was setup an LLC. I'd read that because it protects the player personally.

Again, not my area but I recall seeing this a year or two ago when this insulting foolishness all started about "they're not smart enough to have money."

Very possible, but that's more of an attorney question than a tax one. With an LLC you have to be careful what state and local taxes you open yourself up to, there is also some new stuff that you have to keep up with like BOI Reports filed with FINcen.

 

[Remy]

14.1% to be exact for a self-employed person. Most of these athletes will end up in the 22% bracket, except for the big stars who will get to find out about the higher brackets. ADs are committing malpractice if they are not recommending a few local tax firms. I guarantee there are some CPA UT grads (probably also donors and NIL contributors) that would do a good job for them.

The really tricky thing is state taxes, often college students are considered residents of their home state, not their University location. Nico would do well to do what it takes to be a legal TN resident.

Trust me, having lived in Cali for almost 20 years, their Tax Franchise Board has Nico in their sights. Their problem IS they tax people for even a day who work in California for that days income. I traveled back and forth between LA and Vegas and they caught up with me as I eventually owned property in Nevada and became a resident there. When I turned in a travel voucher to expense travel to LA it was easy for them to see if I had properly coded that days work in our payroll system for withholding for CA state tax. If Nico earns in Tennessee the reverse is true, they have no right to tax income earned outside their state.

 

[VolTull]

I'm not a tax expert by any means but I thought the "way to do NIL" was setup an LLC. I'd read that because it protects the player personally.

If a taxing agency determines the LLC is setup to accept funds without any other rationale, the veil of protection can be "pierced". Usually by court action same with civil liabilities. IOW you can't hide behind paperwork.

 

[SayUWantAreVOLution]

If a taxing agency determines the LLC is setup to accept funds without any other rationale, the veil of protection can be "pierced". Usually by court action same with civil liabilities. IOW you can't hide behind paperwork.

It's an NIL business. Unless the Vol Club is just handing out money without even the pretense of signing merch, appearing, etc, I'd assume that keeps things straight. I'm not an attorney or tax accountant, but I've seen and paid some pretty "low key" LLCs.

And again, the IRS isn't going to go nuts chasing $30-50k and doing full on investigations and such, at least I hope not.

 

[wmcovol]

Very possible, but that's more of an attorney question than a tax one. With an LLC you have to be careful what state and local taxes you open yourself up to, there is also some new stuff that you have to keep up with like BOI Reports filed with FINcen.

Payments to an individual from a LLC is taxable income. LLC simply eliminates the corporation taxes and then individual taxes (double taxiation). If their are multiple members getting payments (ie Player, mom, father, etc), then it might make sense to set up a LLC and have each be paid from the LLC. That would lower the tax level for the player.

 

[37620VOL]

Payments to an individual from a LLC is taxable income. LLC simply eliminates the corporation taxes and then individual taxes (double taxiation). If their are multiple members getting payments (ie Player, mom, father, etc), then it might make sense to set up a LLC and have each be paid from the LLC. That would lower the tax level for the player.

Not really.

Did you know a single-member LLC starts out as a disregarded entity (for federal tax purposes) meaning there is no difference in being taxed as a sole proprietor? But, you can elect for it to be taxed as a corporation where you would get taxed a minimum of 3 ways (individually as wages, individually for dividends, and corporately for corporate income). But, but, rather than do that garbage, you likely further elect to be taxed as an S corporation where you get waxed on wages and passthrough income but the pass-through income escapes social security and Medicare taxes.

 

[37620VOL]

Trust me, having lived in Cali for almost 20 years, their Tax Franchise Board has Nico in their sights. Their problem IS they tax people for even a day who work in California for that days income. I traveled back and forth between LA and Vegas and they caught up with me as I eventually owned property in Nevada and became a resident there. When I turned in a travel voucher to expense travel to LA it was easy for them to see if I had properly coded that days work in our payroll system for withholding for CA state tax. If Nico earns in Tennessee the reverse is true, they have no right to tax income earned outside their state.

If he signed that $8,000,000 contract as a CA resident, he's in for a Bloodsport-style fight with CA over what they will want to claim: $1,100,000 of it. I'm not saying they'll get it, but he better have a CA tax attorney ready to fight this fight for him.

CA is already freaking out about what Ohtani did to them. I love good tax planning.

 

[wmcovol]

Not really.

Did you know a single-member LLC starts out as a disregarded entity (for federal tax purposes) meaning there is no difference in being taxed as a sole proprietor? But, you can elect for it to be taxed as a corporation where you would get taxed a minimum of 3 ways (individually as wages, individually for dividends, and corporately for corporate income). But, but, rather than do that garbage, you likely further elect to be taxed as an S corporation where you get waxed on wages and passthrough income but the pass-through income escapes social security and Medicare taxes.

I clearly said that their was no purpose to establish a LLC just for one person to receive income so yes I understand that.

 

[volfeeva]

Can't wait till we see the IRS tax collectors interrupt a game being played to collect the bling off some player who owes back taxes.

 

[volfeeva]

The emotional pull of materialism is simply stronger than the mental fortitude it takes to manage money more times than not.

Just ask Willie Nelson.

 

[GulfCoasterVol]

Are all these players making their estamated tax payments through the year? 1099's come out this month....and April 25th approaches?