What is "amateur" sports competition?

• Author: Crawford, Charles T.
• Position: Tax-exempt organizations

In 1976, Sec. 501(c)(3) was expanded to include organizations that foster national and international amateur sports competition. This makes gifts to these organizations, which include the out-of-pocket travel expenses of officers, committee members, etc., incurred to further the organization's exempt purpose, deductible. Since 1976, the pertinent part of the section has read as follows (new portion in italics): "Corporations ... organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), no part of the earnings of which inures to the benefit of any private shareholder or individual ...."

"Amateur sports competition" has not been precisely defined. The regulations have not been updated to reflect the 1976 amendments and there have been no published rulings or other official communications that consider the effect of the change in rules to let professionals compete in the Olympic Games.

The IRS has permitted de minimis professionalism from the beginning. Favorable rulings were issued when the vast majority--but not all--of an organization's activities were for amateurs. In one case, exempt status was achieved despite (1) having a segment of the membership that had no amateur requirement, (2) conducting tournaments for pros and (3) conducting an international "open" tournament, but where in fact very few of the members were professionals and very little prize money was involved. The committee reports on the 1976 amendments supported a de minimis exception. The Conference Report commented with approval that the "Senate amendment permits an organization the primary purpose of which is to foster national or international amateur sports competition to qualify as an organization described in section 501(c)(3) ...." (Emphasis added.) Thus, some professionalism is allowed; the question is how much.

In recent years, a new definitional problem has arisen. The purpose of the 1976 amendment was to improve the performance of the United States in the Olympics and the Pan American Games. The Senate debate is clear on that point. But by traditional standards, the Olympics and the Pan American Games are no longer "amateur." If "amateur" is defined by the Olympic standards of 1976, organizations with Sec. 501(c)(3) status...