Halos, Billboards, and the Taxation of Charitable Sponsorships

Ethan G. Stone, University of Iowa College of Law

Article comments

Original publisher's citation: 82 Ind. L. J. 213 (2007).

Abstract

This article reexamines the controversy in the 1990s over the tax treatment of revenues charities earn by selling sponsor acknowledgments. The controversy erupted when the IRS tried to tax Mobil Cotton Bowl and John Hancock Bowl on their sponsorship revenues, claiming that it represented payment for advertising. It ended when Congress amended to tax code to grant sponsorship revenues an effective exemption from tax. Traditionally, this has been understood as a simple and sordid story of raw lobbying power supplanting good tax policy. I argue that the controversy reflects the overriding importance of political symbolism in understanding the charitable tax exemption and the unrelated business income tax (UBIT) that protects it.