You can correct my thinking as you see fit Rev, but here is how I see it: There are any number of students that are employees on University campuses that receive scholarships. Some are working as lab assistants, others in computer labs, etc. And even though they are employees, and receive a scholarship, their scholarship isn't taxed because the scholarship doesn't require them be an employee. Likewise, a football player's scholarship isn't dependent on them playing football. They just have to be a football player to get one. Subtle difference. That's why football scholarships are year to year. A football player can get a scholarship, quit the team, and still have that scholarship. They just can't get year 2. So I don't see how this changes any of that, but that's just how I see it.
stipends are certainly taxed for say teachers assistants. now they are taxes at an almost zero tax rate, but they certainly are taxed.
A stipend and a scholarship are two different things. A student, who is working for the computer lab, part time, is a part-time employee. He may have a scholarship as well. The two are independent. And one can even come before the other. For example: Rob graduates high school with a 4.0 GPA and a 36 ACT and gets a full ride to Jerkoff U, where he is majoring in Engineering. Upon realizing that he had time enough for work and school, he applied for, and received, a job working in the computer lab, which is open 24 hours a day, and requires staffing to help with technical questions, restocking the paper in the printer, and changing ink cartridges. He is paid $8.50 per hour, and works 18 hours per week. In this scenario, is Rob an employee of Jerkoff U while also receiving a tax-free scholarship? That's what I'm talking about. And yes, he is an employee, and yes, his scholarship is tax-free. His wages from working in the computer lab are taxed.
I'm struggling to see how this makes the scholarship taxable. I'm also struggling to see how they are employees as well, much that's an entirely different area.
First of all - I was getting a little ahead of what is going on. A NLRB ruling does not have any necessary effect on how the IRS treats "income." But - my understanding of what the NLRB ruled that by virtue of being on a scholarship that the athletes are employees. Then you have: http://www.irs.gov/publications/p970/ch01.html
Whether or not they are employees, it's still income. Now, we might get into SE income issues with this potentially, but those rules listed above are true whether they are deemed employees or not.
Don't want to be in the poor house as a paraplegic after sustaining a college football injury? You can buy insurance for that kind of thing when you're in high school.
I think the argument is still that the scholarship isn't a condition of employment. To have a taxable scholarship based on teaching, you have to teach. But to have a football scholarship doesn't require playing football. If the conditions of the scholarship stated you are required to play X amount of downs, or whatever, then you can make a case that the scholarship is contingent on work, so it is payment for work. But that isn't the case. The scholarship exists whether a down is played or not. But if not, then might not get next year's scholarship.
We have a guy in that group who is suing the NCAA. He literally played at most 10 minutes his whole career. Was a massive bust. How he can say he got the short end of it is beyond me.
I think I understand what you are saying. But I guess my problem with it is that the only players allowed to form the union are scholarship athletes (at least that is what the news reports have said - I am not reading the ruling). If that is true, then why? My answer would be because the scholarship is the "payment" for the services. And the services do not necessarily mean playing a down, it simply means being part of the team. Does that make sense?
Wait till Northwestern says....OK boys pay your own tuition, football is no longer going to be played here.
"I would not take for granted that the Northwesterns of the world would continue to play Division 1 sports." - Henry Bienen, Northwestern President Emeritus I suppose I should've revised to say that Division 1, full-scholarship football, will continue to be played.
