This week marked the conclusion of two major sports seasons and neither championship had a shortage of truly ridiculous acts. Our very own Pittsburgh Penguins won their second consecutive Stanley Cup on Sunday night, much to the chagrin of Predator fans everywhere. Attempting to derail the former champs, Preds fans tried to cast some bad juju by throwing catfish at people. If that wasn’t enough lunacy, the average ticket price in Nashville during the Stanley Cup was over $2,500 with some people paying as much as $7,800 to get a taste. The NBA on the other hand wasn’t to be out done, as someone paid $133,000 for two courtside seats to game 5 of the finals! You read that correctly… One hundred thirty-three thousand dollars.
Now we don’t know who bought those tickets, but often sports tickets are bought by business. The reason it is important is because it brings into the question the deductibility of the tickets. Generally speaking, tax law states that to be able to claim the deduction the event must be directly related to conducting business. It can also be deductible if it passes the “associated test” where you must show that it is associated with the business or directly after or before substantial business. The real kicker is that the expense must be deemed reasonable. I can’t imagine a situation where $133,000 for two tickets is “reasonable” but reasonability is determined by the market rate. So, should the tickets be fairly valued, it could be conceivable to deduct up to 50% of the business expense.
Now we took some liberty with the assumptions, but honestly it isn’t too far out there. Businesses often buy tickets and even boxes for various events. I don’t know about you, but if that is the case here I can’t say I am too happy about having to help pay the remaining $66,500 that wasn’t deducible no matter how small my portion might be.