As the National Collegiate Athletic Association (NCAA) made the decision regarding the revenue of student athletes regarding the use of their name, image, and likeness (NIL), a large aspect of this concerned the cyberspace. More than online advertisements or having their likenesses in video games, student athletes can also earn big bucks by using their image as a non-fungible token (NFT).
With the NFT market rapidly expanding, there’s definitely a market for future sports superstars–careers of student athletes have been the subject of professional sports teams and everything related to it. If you’re curious about this potentially lucrative field, here’s how NFTs can help student athletes.
NFTs and Student Athletes
To start, it is important to understand what an NFT actually is. It’s more than an image or a video sold for insane amounts of money. A non-fungible token, as the name suggests, is a non-interchangeable token that represents something in cyberspace. It is usually associated with music, video, images, and even in-game items–but it’s more than that. Each of these files is embedded with a piece of code that acts as its unique identifier. Imagine having a copy of the Mona Lisa and with it, a unique contract that identifies and traces the item wherever it may be. Since NFT, like most cryptocurrencies, is built on the blockchain, it is virtually impossible to steal or replicate. People may have the same photo or video but without the piece of code in it, it’s worthless.
The NFT market is open to everyone and it can cover everything you can think of. For student athletes, this can come in the form of exclusive photos, unique sports clips, or even other digital media they make themselves. In fact, there have been exclusive NFT marketplaces specifically for student athletes. Some experts argue that what makes NFTs sell for amazing amounts of money is that more than the piece that is perceivable by the senses, it’s the sense of owning a piece of history that lends skyrocketing values to these digital assets.
This is taken a step further as student athletes can essentially team-up with NFT artists and firms to lend their NILs to create entire batches of unique NFT items to be sold on the marketplace. With the NCAA policy amendment, these students can join in on the action and make thousands, or even millions, of dollars at the drop of a hat.
Planning for the future with CRTs
Of course, while cryptocurrencies and NFTs are fairly new technologies flourishing on a supposedly decentralized market, it still makes real money in the real world. As far as the US government is concerned, this will be the student athlete’s income and is therefore subjected to taxes. There’s no need to fear though, the laws are getting more comprehensive by the day, and following them is to everyone’s well-being.
One increasingly popular strategy to reduce income taxes from cryptocurrency transactions is through the use of a Charitable Remainder Trust. For those unfamiliar with the concept, a charitable remainder trust is essentially an irrevocable trust fund. The student athlete can then make contributions to this trust fund, making him eligible for a partial tax deduction proportionate to the contribution. This is a great way to reduce crypto taxes that lets them distribute income to the trust’s identified beneficiaries and can even serve as a revenue stream for the student athlete and their beneficiaries in the future. There are certain rules and computations involved, as with all tax-related matters. To give you a headstart, the Internal Revenue Services (IRS) has published a guideline regarding CRTs.
What makes it especially advantageous is that it gives you a place to keep your funds and assets in and receive a tax deduction for it. Even better, all the growth and increase in value that your charitable remainder trust generates can be deferred in terms of taxation. Lastly, aside from being their own investment, a student athlete can donate a portion of the fund to a charitable organization of their choice. This move works to their advantage in a number of ways. The first is that charitable donations are generally subjected to tax deductions in compliance with existing IRS guidelines. The second is from the fact that student athletes are also public figures, much like their professional athlete counterparts. Their act of charity, stemming from lending their NIL to the NFT world, will will definitely create a positive image that will boost their personal brand. This, in turn, will help build their reputation and increase the other opportunities to cash in on their NIL through partnerships and sponsorships.
The ruling regarding student athletes and their use of their name, image, and likeness will definitely allow a lot of struggling individuals across the country to make a name for themselves and a living for their families. Through the strategic use of the bustling NFT marketplace, there are virtually countless ways to make the most out of their skill and fame. Also, it is important to recognize that the right preparation, through the use of government plans and programs, can ensure that the gains from these opportunities last beyond their collegiate sporting years.