Bloomberg Tax
Sept. 2, 2021, 8:01 AM

Student-Athletes Can Make Money Off Their Names, Images, Likenesses—What Now?

Andrew Dana
Andrew Dana
Parker Poe
Alonzo Llorens
Alonzo Llorens
Parker Poe
Jeff Morris
Jeff Morris
Parker Poe

In late June, NCAA athletes across the country had essentially no path to share in the profits of college athletics. Within the span of a few days, a landscape that had lasted for decades changed. After a sternly worded U.S. Supreme Court opinion and just before several state laws went into effect addressing student-athlete compensation, the NCAA announced its athletes can make money off the use of their names, images, and likenesses.

Now many student-athletes, tax advisors, and other professionals in the sports and entertainment industry are determining how to make the most of these new opportunities. There are key considerations that go beyond tax laws, including how to secure trademarks, develop a brand, and maximize the role of TikTok, Instagram, and other social media platforms, as well as whether to request or accept payment in cryptocurrency. But tax laws should be part of the initial business discussion, as they impact how athletes should structure a company to house their earnings and utilize deductions.

Structuring a Business Entity

The default option is a sole proprietorship if athletes are looking to report their earnings as part of their standard income tax returns. But this default offers no asset protection, no business structure, and is reported on Schedule C, which can be one of the more scrutinized parts of the Form 1040 by the Internal Revenue Service, due to blurred personal and business expenses.

For those reasons, many student-athletes will be better served by creating a business entity or company. The best options for tax purposes are likely a partnership, S Corporation, or C Corporation. The first two allow everything the athletes earn to pass through to them from a tax perspective. They come with benefits that include reporting business deductions through the entities and creating bank accounts with their own expenses that are accounted for apart from the athletes’ activities as individual taxpayers. Some may also be eligible for a 20% deduction for pass-through businesses.

C Corporations, on the other hand, pay the lowest tax up front at 21%. But they have double taxation, where distributions are taxed at 15% on top of that. The strategic decision with C Corporations depends on whether athletes plan to regularly take money out of the entity or reinvest their earnings. If the plan is largely to distribute the money, then the double taxation largely eliminates the benefit of the lower C corporation tax rate. But some athletes will favor keeping the earnings within the entity as funds for additional brand-building or other business activities, in which case a C Corporation can be a strong option.

Maximizing Deductions

Athletes and their tax advisors will also want to work through what tax deductions are available based on their business activities. Student athletes may deduct ordinary and necessary expenses for their business, which may include work-related travel, equipment, training, coaching, and insurance premiums, among others. This is a complex area requiring careful examination of permissible expenses. It will be important to maintain meticulous records and substantiate the business purpose of every claimed deduction.

State Taxation

College athletes who earn income in different states will be required to file multiple state income tax returns reflecting proper nexus and apportionment. In addition, there may be various city, county, and local taxes assessed on the activities. This creates a burden to keep careful records of travel, team schedules, and event schedules. Athletes expecting to earn a majority of their incomes in the states of their universities may factor these considerations into admission decisions. For example, from a tax perspective, a Florida resident athlete may benefit from attending University of Florida over UCLA if the latter exposes them to a high state income tax.

Retirement Planning

College athletes should consider available retirement plan options. These options will differ depending on whether the athlete is treated as self-employed or an employee. An athlete will be viewed as self-employed if carrying on a trade or business as a sole proprietor, independent contractor, or a member of a partnership that carries on a trade or business. If the athlete creates a C corporation or S corporation, then they may be treated as an employee of the entity. Due to the complexities, athletes should consult with retirement plan specialists.

Keeping Up With Evolving Guidance

As noted earlier, the business landscape for NCAA athletes changed rapidly, and there are outstanding questions on taxes and other areas of importance. The NCAA itself acknowledges the need for more guidance.

“With the variety of state laws adopted across the country, we will continue to work with Congress to develop a solution that will provide clarity on a national level,” NCAA President Mark Emmert said in a press release announcing the NCAA’s interim plan. “The current environment—both legal and legislative—prevents us from providing a more permanent solution and the level of detail student-athletes deserve.”

Now that athletes in every state have a green light, even states like Georgia that already implemented a name, image, and likeness law may revise theirs as the playing field shifts. Universities and conferences can also set their own reporting requirements and adopt additional policies, according to the NCAA.

Monitoring the next steps by state and federal lawmakers, the courts, the NCAA, conferences, and schools will be critical to ensuring that student-athletes can make the most of their new opportunities without losing athletic or academic eligibility.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

Andrew Dana, Alonzo Llorens, and Jeff Morris are attorneys in Parker Poe’s Sports & Entertainment Industry Team. They can be reached at,, and

Bloomberg Tax Insights articles are written by experienced practitioners, academics, and policy experts discussing developments and current issues in taxation. To contribute, please contact us at

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