Can a person deduct fees for competing in a marathon if proceeds from that event benefit a charity? Take it one step further … can they also deduct travel expenses for the charitable marathon, 5K, or triathlon?
Kerry Inger, assistant professor in the School of Accountancy at Harbert College, and a pair of colleagues visiting from Bradley University and the University of Missouri at St. Louis were at lunch one day and posed the question amongst themselves. “One of them said that their friends deduct race entry fees on their tax return if the race benefits a charity,” Inger said. “The other friend said, ‘my friends do that – and they also deduct the cost of travel, meals and lodging – as a charitable contribution deduction.’ We agreed that it was fishy.”
In that moment, the fictitious Not So Pokey Hokies Running Club (the authors attended Virginia Tech together) was born and Inger was on the brink of an award-winning case study. This "club" is based on real people who participate in a wide range of running activities including charitable race participation, not-for-profit running organization management, nationally competitive racing, pacing, competitive team membership, coaching and collegiate sports.
Inger co-authored the "Not So Pokey Hokies" case study, which requires students to identify tax issues related to the running club members' running activities and address the issues using tax research skills. Each runner in the case is based on a real person and is presented as a separate scenario with some common concepts across the scenarios.
For their efforts, Inger and colleagues were presented with the 2017 American Taxation Association/Deloitte Teaching Innovation of the Year at the annual American Accounting Association conference in San Diego. “I am very excited to receive this award,” said Inger, a running enthusiast. “We will be asked to present this case at the tax-specific (ATA) meeting in February. This award allows us to be recognized in front of our peers, get my name out there, and also get this case out there so more people can use it. A lot of work went into this case. We want people to use it in classrooms – not just get published.”
Regardless, the study has been accepted for publication by Issues in Accounting Education.
Inger will use this case -- reflecting a variety of different runners’ tax situations -- in her Tax Research classes this fall, and perhaps again in the future.
“What we have is 10 runners with 10 different issues,” Inger said. “Each runner has a description. Students have to go in and identify the issue, research tax law and figure out the correct answer to these issues.”
Specific concepts included are hobby versus for-profit activity classification, independent contractor versus employee role classification, income recognition, expense deductibility, charitable contribution deductions and athletic scholarship taxation.
“Tax research is preparing our students for what they are going to do on the job when a client says ‘hey, I’ve got this transaction. What is the answer? We’ll call it a wealth – or over-wealth – of tax law, however you want to look at it. They have to be able to do the research. That’s what this class is designed to do – teach them how to do it.”