Sponsorship of Little league?

[flyingdiver]

If you sponsor a little league team, in return for advertising space on a banner. Would that be considered advertising expense or charitable contribution? The league is a 501c/503c? organization. I would think advertising, since we are receiving ads in exchange for money.
Rob

[mwcpa]

see Reg. §§ 1.162-15(b), 1.170A-1(c)(5).

Reg. §§ 1.162-15 (b) Other contributions .—
"Donations to organizations other than those described in section 170 which bear a direct relationship to the taxpayer's business and are made with a reasonable expectation of a financial return commensurate with the amount of the donation may constitute allowable deductions as business expenses, provided the donation is not made for a purpose for which a deduction is not allowable by reason of the provisions of paragraph (b)(1)(i) or (c) of §1.162-20. For example, a transit company may donate a sum of money to an organization (of a class not referred to in section 170) intending to hold a convention in the city in which it operates, with a reasonable expectation that the holding of such convention will augment its income through a greater number of people using its transportation facilities."

Reg. §§1.170A-1(c)(5)
"Transfers of property to an organization described in section 170(c) which bear a direct relationship to the taxpayer's trade or business and which are made with a reasonable expectation of financial return commensurate with the amount of the transfer may constitute allowable deductions as trade or business expenses rather than as charitable contributions. See section 162 and the regulations thereunder."

Yes, the expense you note may actually be "advertising" and not "charitable" in nature for you.