Gift us really the wrong term in this scenario.
I’m not a tax attorney, obviously. Nor am I pretending to be.
I misused the term gift, because in reality they really aren’t gifts in the legal/tax sense, these are actually payments for services rendered, are they not? Quid pro quo. I give you/your family this money, you play here. Does that not make it income?
Well, a couple of points. Every person is allowed up to $14k per year from a “charity” or family member or similar as a gift that is not taxable. So you can extrapolate the money from there if a church or not for profit gives money to a recruit’s family.
Second, it is important to keep IRS rules separate from NCAA. Even if allowed and taxed appropriately under IRS rules, it can still be an NCAA violation.
At the end of the day, other than that gift carve out, you generally have to pay taxes on any money you earn. That’s how the IRS gets mobsters or drug dealers for tax evasion. Even if money is generated illegally and cannot be banked, under IRS laws, you still have to pay taxes on all income earned, subject to exclusions.
Whether it is a bag of cash, paying 10x fair market value for a house, a job to a sibling, or buying a business, you have to pay taxes. So going back to the house example, if Booster gives a recruit’s parents 500k for a house that cost them 25k, and they report it that income and pay taxes on it, there is no IRS issue. Money was recognized and taxes paid. This is likely an NCAA violation, but it is not against the law.
Similarly, if a booster gives a bag of $100k in cash and a recruit declares the income and pays taxes, there is no IRS issue, though clearly an NCAA one.
In any of those above situations, if you don’t pay taxes, the IRS can come after you. Who knows how much of these situations happen or how many wind up having taxes paid. I would think and hope if a booster’s investment fund is smart enough to set up the purchase of a house, they are smart enough to make sure it is done clean and properly taxed at the end of the year but who the **** knows.
Sorry if I came off as a **** or aggressive. It’s been a day. I hope that helped to clarify or answer some questions. Happy to answer as others come up.