For football tickets, can I include a required contribution in the cost basis?

[Jello1]

I bought season college football tickets that I resold on Stubhub. There was a minimum contribution required to purchase them, which go to student scholarships.

I’m entering the sale as a capital gain. For the cost basis can I include this required contribution or does it go under donations instead?

[AnnetteB6]

The required contribution amount should be deducted as a charitable contribution instead of being included in the basis of the cost of the ticket itself.

From my experience, the required contribution is only required depending on the location of your seats, so you have a choice of whether to contribute to the scholarship fund in order to acquire better seats.  If that is not the case for you, then you would have an argument that the contribution is actually part of the basis of the cost of the tickets.  Otherwise, the contribution should be treated as a contribution.

[Jello1]

Thanks for your reply. That’s right the required contribution is only for designated seats. But I receive these specific seats as part of benefit being faculty so I don’t know if I have the option to downgrade. 

In terms of charitable contribution, I found out from IRS Pub 526 that these type of “right to buy” donations aren’t deductible. That makes me wonder, shouldn’t it be allowed then to be used as a cost basis?

[AnnetteB6]

You are correct about the 'right to buy' donation not being deductible.  I apologize for missing that point.  

That does strengthen the case that the amount of the required donation could be added to the cost basis for the tickets since there is no chance of 'double-dipping' by deducting the donation amount.  

Before including the full amount of the contribution as part of the cost basis, double-check any documentation you received from the college with regard to the required donation.  A portion may be deductible if it was considered to be over and above the value of the benefit you received from making the donation.  If that is true, it should be documented in a letter to you from the college.

@Jello1 

[Jello1]

Thanks for confirming. In terms of the letter, I received an order confirmation but no letter. On the website though, it says certain seats have a minimum required donation. 

When you say the donation is above the benefit, do you mean when the donation is higher in value? For example if the tickets were $100 and the contribution was $200…$100 would be deductible and the other $100 could be applied to the cost basis. Or is only the minimum required donation eligible for the cost basis and the rest above the minimum is deductible. For the record, we only did the minimum, which is less than the ticket price. 

[DavidD66]

As of Jan. 1, 2018, donors who make a contribution to or for the benefit of a college or university in exchange for the right to purchase tickets or seating at an athletic event in the university’s stadium can no longer take a charitable deduction for any portion of the contribution. The law clearly states that, “no charitable deduction will be allowed for any amount” of these contributions.  As for adding the "donation" to the cost basis of tickets sold, I am not aware of any rulings that prohibit that.  The contribution is made to receive a benefit, which is purchasing tickets.  Therefore, a good argument can be made that they should be included in the cost when calculating the gain or loss on the sale of the tickets.