April 18, 2003

IRS Ruling on Naming Rights for Facilities May Jeopardize Status of Some Tax-Exempt Bonds

By MICHAEL ARNONE

Colleges that sell tax-exempt bonds to pay for construction and then make lucrative deals to sell the naming rights to the new facilities might soon have a difficult choice to make: Lower the value of the naming-rights contracts or lose the tax-free status of the bonds.

The U.S. Internal Revenue Service issued a ruling in November, made public only recently, that the privileges gained by individual donors and corporations that purchase naming rights to facilities, such as stadiums and

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