Should golf rater rounds be considered taxable income?

[Michael Whitaker]

You guys have the whole relationship wrong...raters are hobbyists who rate or review courses for fun, not compensation. It has been my experience that the panelists do not expect free golf, but if the course chooses of its own accord to not charge the "reviewer" then so be it.

How can comping a rater be different than equipment manufactures sending free drivers, putters, or shoes to reviewers to sample... or, book publishers sending free books to reviewers... or, wineries giving their product to reviewers, etc, etc, etc. Should all of these people get a 1099 for the value of the free samples they receive?

If I take a opinion survey in the grocery store in exchange for a free hot dog do I need to report that on my taxes?

[Kirk Moon]

Yawn.

The rater isn't "working" for the publisher. It's voluntary.

Actually, they are, in every meaningful sense of the word.  They just aren't getting paid cash to do it.

In their role as a rater for a publication they are acting as a representative of the publisher to the golf course being rated. 

Every time they rate a course they are providing a tangible service to the publisher (a considered and informed rating that the publisher will use to generate a marketable asset, a ratings list). 

They are receiving compensation from the publisher for providing this service (access, free golf, affiliation with the publisher which enhances the reputation of the rater).

[Greg Tallman]

Yawn.

The rater isn't "working" for the publisher. It's voluntary.

Actually, they are, in every meaningful sense of the word.  They just aren't getting paid cash to do it.

In their role as a rater for a publication they are acting as a representative of the publisher to the golf course being rated. 

Every time they rate a course they are providing a tangible service to the publisher (a considered and informed rating that the publisher will use to generate a marketable asset, a ratings list). 

They are receiving compensation from the publisher for providing this service (access, free golf, affiliation with the publisher which enhances the reputation of the rater).

Do they have work schedules?
Do they have required projedcts?

I imagine a good lawyer could shred a case that attempts to label them employees.

They are simply well respected people whose opinions are sought.

[Kirk Moon]

You guys have the whole relationship wrong...raters are hobbyists who rate or review courses for fun, not compensation. It has been my experience that the panelists do not expect free golf, but if the course chooses of its own accord to not charge the "reviewer" then so be it.

How can comping a rater be different than equipment manufactures sending free drivers, putters, or shoes to reviewers to sample... or, book publishers sending free books to reviewers... or, wineries giving their product to reviewers, etc, etc, etc. Should all of these people get a 1099 for the value of the free samples they receive?

If I take a opinion survey in the grocery store in exchange for a free hot dog do I need to report that on my taxes?

Are there "independent" raters who only work for themselves and publish their results on their own web site?  Yes.  But we aren't talking about these guys.  They are, indeed, hobbyists who do it for the love of the game.  Most of them pay their own freight on public courses.  Any access they gain to exclusive courses is via charm and good luck and knowing the right people.

Do these individuals get comped by major courses?  Are they given access to exclusive private courses simply because they are a "rater"?  Not likely.

The guys we are talking about are raters for Gold Digest, Golf, Golf Week.  They obtain access to exclusive private courses and comped rounds from typically expensive courses specifically because they represent one of these publishers and the golf course in question wants to be rated (hopefully highly) by one of these publications.

This is a business transaction.  The golf course is giving something away to the publisher (access, green fees) in hopes that they will get something beneficial in return (a favorable rating that will increase prestige or marketability of the facility.)  The publisher is getting a marketable asset (a ratings list based on informed opinion) that will enhance the net value of their publication.  The rater is working on behalf of the publisher in return for access, free golf, prestige, etc.  

[Michael George]

The magazine has very little right to "direct and control" the actions of the rater so they are not employees.  They are independent contractors.  

However, that has very little impact whether they have taxable income for benefits received - just a matter of the form of income and who is responsible for the tax.

[Kirk Moon]

Do they have work schedules?
Do they have required projedcts?

I imagine a good lawyer could shred a case that attempts to label them employees.

They are simply well respected people whose opinions are sought.

A person doesn't have to be an "employee" of a business to receive taxable income from that business.  They can be an independent contractor. 
 
All they need to do is provide a service to a business and receive compensation from the business for providing that service.  If they do that, the business must generate a 1099 form declaring the the compensation they provided to the individual in question which they forward to the IRS and the individual.  The IRS treats this as income and the independent contractor must declare it on their personal income tax (or business tax filing if they are operating as a business.)

The question we are discussing is whether the free golf received by the rater for performing ratings for a publisher qualifies as compensation from the publisher for services rendered.  I think one could make a reasonable argument that it does. 

[Adam Clayman]

The question we are discussing is whether the free golf received by the rater for performing ratings for a publisher qualifies as compensation from the publisher for services rendered.  I think one could make a reasonable argument that it does. 

That might be true if there was an expectation of being comped. There is none. Some even prefer not to announce they're raters.

[Michael Whitaker]

Kirk - I have to disagree. The courses do not necessarily give anything away, and when they do they are usually using that freebee to attract the reviewer to their course instead of having them go somewhere else.

In multi-school markets college athletic departments provide sports writers free parking, meals, communication services and (in some instances) transportation to lure them to their games. In competitive areas there has been a "battle of the buffets" to get the best sports coverage for their teams. Should the writers or newspapers have to pay taxes on the food, beverages and other perks lavished on these sports writers by a school to gain better coverage?

My wife has a business that does audience research for the theater industry. She often sends well chosen theater enthusiasts to see shows (at no charge) in exchange for an opinion survey after the show. Should these theater enthusiasts be given a 1099 for the value of their tickets?

The golf raters are no more than well chosen (hopefully) golf enthusiasts who are asked to take an opinion survey after visiting a course. They volunteer their time and effort... just as my wife's theater enthusiasts do. They are invited to visit courses (or attend musicals) in exchange for their opinions. If a course is not interested in a rater sharing his/her opinion with a magazine then they should just stop inviting them to play their course ... just as a Broadway show could stop inviting theater enthusiasts to attend their productions.

The golf panelist (like the theater enthusiast) is invited to visit because the business wants to know what these people collectively think about their product. If we start taxing the gathering of people's opinions then the IRS will have struck a very deep well.

[Kyle Harris]

Yawn.

The rater isn't "working" for the publisher. It's voluntary.

Actually, they are, in every meaningful sense of the word.  They just aren't getting paid cash to do it.

In their role as a rater for a publication they are acting as a representative of the publisher to the golf course being rated. 

Every time they rate a course they are providing a tangible service to the publisher (a considered and informed rating that the publisher will use to generate a marketable asset, a ratings list). 

They are receiving compensation from the publisher for providing this service (access, free golf, affiliation with the publisher which enhances the reputation of the rater).

Do they have work schedules?
Do they have required projedcts?

I imagine a good lawyer could shred a case that attempts to label them employees.

They are simply well respected people whose opinions are sought.

No wonder there are so many consultants... I guess they don't have their income taxed.

[Greg Tallman]

Kirk - I have to disagree. The courses do not necessarily give anything away, and when they do they are usually using that freebee to attract the reviewer to their course instead of having them go somewhere else.

In multi-school markets college athletic departments provide sports writers free parking, meals, communication services and (in some instances) transportation to lure them to their games. In competitive areas there has been a "battle of the buffets" to get the best sports coverage for their teams. Should the writers or newspapers have to pay taxes on the food, beverages and other perks lavished on these sports writers by a school to gain better coverage?

My wife has a business that does audience research for the theater industry. She often sends well chosen theater enthusiasts to see shows (at no charge) in exchange for an opinion survey after the show. Should these theater enthusiasts be given a 1099 for the value of their tickets?

The golf raters are no more than well chosen (hopefully) golf enthusiasts who are asked to take an opinion survey after visiting a course. They volunteer their time and effort... just as my wife's theater enthusiasts do. They are invited to visit courses (or attend musicals) in exchange for their opinions. If a course is not interested in a rater sharing his/her opinion with a magazine then they should just stop inviting them to visit... just as a Broadway show could stop inviting theater enthusiasts to share their opinions.

The golf panelist is invited to visit because the course wants to know what these people collectively think about their product. If we start taxing the gathering of people's opinions then the IRS will have struck a very deep well.

While we do not agree on 18 at May River we are in lock step here. It is simply an opinion that has been solicited. THat said our current government will find a way to tax one's opinion. What a windfall that will create. GCA will be gone after the first quarter under such a program.

[Kyle Harris]

Michael:

Are we really taxing the gathering of opinions here? If a rater so chooses to play a course and pay for the privilege, they may still give their opinion without the tax.

[Michael Whitaker]

Greg - I'm not saying 18 at MR is great, just not one of the "Most Disappointing" finishing holes I have seen.  

[Greg Tallman]

Yawn.

The rater isn't "working" for the publisher. It's voluntary.

Actually, they are, in every meaningful sense of the word.  They just aren't getting paid cash to do it.

In their role as a rater for a publication they are acting as a representative of the publisher to the golf course being rated. 

Every time they rate a course they are providing a tangible service to the publisher (a considered and informed rating that the publisher will use to generate a marketable asset, a ratings list). 

They are receiving compensation from the publisher for providing this service (access, free golf, affiliation with the publisher which enhances the reputation of the rater).

Do they have work schedules?
Do they have required projedcts?

I imagine a good lawyer could shred a case that attempts to label them employees.

They are simply well respected people whose opinions are sought.

No wonder there are so many consultants... I guess they don't have their income taxed.

Call me naive but don't consultants provide professional services aimed at improving the profitability of their suitor? Could you make the argument that a panelist is providing a "professional service" versus an opinion?

[Greg Tallman]

Greg - I'm not saying 18 at MR is great, just not one of the "Most Disappointing" finishing holes I have seen.  

Simply saying that given what precedes it does disappoint

[Ed Brzezowski]

Just got in from USGA rules school. Can I deduct the gas ,tolls and program fee??  How about the shirts, pants and books? sunscreen?? String , laser ,water and other junk we carry?

Leave to poor raters alone.

[Michael Whitaker]

Michael:

Are we really taxing the gathering of opinions here? If a rater so chooses to play a course and pay for the privilege, they may still give their opinion without the tax.

Yes, we would be taxing opinions.

When a rater receives a free round of golf it is because they are INVITED to visit. It can't happen otherwise as the course is the one who opens the door and encourages the rater to visit. Why? To solicit their opinion. No other reason.

Supposedly, raters have knowledge or expertise beyond that of the average consumer (at least they should). Whether it be for golf, theater, wine, or whatever, they are recruited to share their opinions on their area of special knowledge. In exchange they are often invited to sample a thing, place, or experience in exchange for their opinion about this thing, place, or experience. I don't see how that is taxable.

[Kyle Harris]

Michael:

Are we really taxing the gathering of opinions here? If a rater so chooses to play a course and pay for the privilege, they may still give their opinion without the tax.

Yes, we would be taxing opinions.

When a rater receives a free round of golf it is because they are INVITED to visit. It can't happen otherwise as the course is the one who opens the door and encourages the rater to visit. Why? To solicit their opinion. No other reason.

Supposedly, raters have knowledge or expertise beyond that of the average consumer (at least they should). Whether it be for golf, theater, wine, or whatever, they are recruited to share their opinions on their area of special knowledge. In exchange they are often invited to sample a thing, place, or experience in exchange for their opinion about this thing, place, or experience. I don't see how that is taxable.

Mike,

I guess I would argue that really the club is inviting the magazine on to their course for the purpose of promoting the club's worthiness as a golf course (could be called marketing?) The magazine uses raters as a method of developing that promotional material.

Which seems more realistic?

[Kirk Moon]

Kirk - I have to disagree. The courses do not necessarily give anything away, and when they do they are usually using that freebee to attract the reviewer to their course instead of having them go somewhere else.

In multi-school markets college athletic departments provide sports writers free parking, meals, communication services and (in some instances) transportation to lure them to their games. In competitive areas there has been a "battle of the buffets" to get the best sports coverage for their teams. Should the writers or newspapers have to pay taxes on the food, beverages and other perks lavished on these sports writers by a school to gain better coverage?

My wife has a business that does audience research for the theater industry. She often sends well chosen theater enthusiasts to see shows (at no charge) in exchange for an opinion survey after the show. Should these theater enthusiasts be given a 1099 for the value of their tickets?

The golf raters are no more than well chosen (hopefully) golf enthusiasts who are asked to take an opinion survey after visiting a course. They volunteer their time and effort... just as my wife's theater enthusiasts do. They are invited to visit courses (or attend musicals) in exchange for their opinions. If a course is not interested in a rater sharing his/her opinion with a magazine then they should just stop inviting them to play their course ... just as a Broadway show could stop inviting theater enthusiasts to attend their productions.

The golf panelist is invited to visit because the course wants to know what these people collectively think about their product. If we start taxing the gathering of people's opinions then the IRS will have struck a very deep well.

I understand and agree with most of what you say.  But I think we are conflating two somewhat unrelated issues.  Informed feedback vs. business interests.

If a golf course wants to hear the opinion of a group of informed consumers about their course and nothing more, golf course managers would have no problem getting the right people to come play their course any time they want.  

On the other hand, the course ratings published by Golf Digest, Golf and Golf Weekly aren't really about giving golf courses informed feedback (although that is certainly a beneficial byproduct of the process).  They are really more about generating business income and doling out prestige.  

Public access courses desperately want to be included on these lists because of the big boost it gives to their business.  Private courses (if they care at all) are interested in them because it makes their courses even more desirable, exclusive and prestigious which enhances value (tangible and intangible) to the existing members.  The publications love the lists because they generate eyeballs and interest every year which translates into revenue for them.  And the raters love them because the process provides them an opportunity to play courses that they would otherwise probably not have access to and/or be able to afford to play.  

IMHO, the ratings lists are really more about business and only secondarily to do with providing informed feedback.   Since the rating game is largely about money, particularly for the publishers and golf courses, I don't see it as too much of a stretch to consider the raters as being "worker bees" in this moneymaking venture even if they are doing it out of love for the game and a desire to see great golf courses.  

Rhetorical thought experiment: What do you think the "fair market value" of a round of golf at each of the top 100 golf courses in America would be if these rounds were made available to the highest bidder?  Big number, right?  Huge number. Scary number.  A rater who is fortunate enough to play these courses gets an awful lot of value for what they do.  I imagine that the publishers could actually charge people to be raters and still have no trouble filling their ranks. 

[Kirk Moon]

The question we are discussing is whether the free golf received by the rater for performing ratings for a publisher qualifies as compensation from the publisher for services rendered.  I think one could make a reasonable argument that it does. 

That might be true if there was an expectation of being comped. There is none. Some even prefer not to announce they're raters.

That would seem to be the right way to do it (assuming you can get access to the course).  Most serious restaurant reviewers do the same (if they can.)

Out of curiosity, do you have any idea of what percent of rounds are comped for raters from the big three?  I was assuming that most were.  If not, then much of my argument is moot.

Side question:  if a rater isn't comped, do they pick up the tab or does the publisher reimburse them for the expense?  Thx.

[Michael Whitaker]

Kyle,

I'll answer you in the context of my wife's business.

She has recruited several hundred theater enthusiasts who are invited to submit their opinions of plays and musicals they attend throughout the year. Often, producers (or marketing companies) will contact my wife and ask her to recruit volunteers from her pool of enthusiasts to attend a show. To entice them to attend they are offered free tickets in exchange for their opinion of the show. The producer will then pay my wife a fee to collect those opinions and prepare a report. My wife definitely pays taxes on the fee she collects, but her enthusiasts are not given a 1099 for their free ticket. They are the producer's invited guests who agree to share their thoughts in exchange for the free ticket. Without the free tickets most of the enthusiasts would not attend these shows... as most of the shows are not very good.

How does this differ from the golf panels?

[Mike_Young]

Yawn.

The rater isn't "working" for the publisher. It's voluntary.

The ranger isn't working for the course.  It's voluntary.

Do you have any idea what you're talking about?

Yes ,I do.

Golf courses would not be seeking raters for their opinions.  They are seeking them in order to get the required votes for a favorable rating.  Let's change it for a minute.  What if these same raters came to the course and mowed the fairways and raked the bunkers and were then allowed to play the course.  Would that be taxable?  Barter is becoming an issue in golf.
There are people out there getting 1099's for their airline miles they accrue while flying for their company. 
Ed mentions his rules school expenses, if he were affiliated with a magazine to write articles on rules or if he were designing golf courses then he could deduct those expenses.  And as Adam says a rater can deduct his expenses also if this scenario is accurate.  Which means if the rater pays to play a specific exclusive course under the  guise of magazine rater affiliation then he should be able to deduct that green fee also. 

[Michael Whitaker]

Kirk,

Sorry for the Mucci-like response, but you have asked a lot of questions here:

I understand and agree with most of what you say.  But I think we are conflating two somewhat unrelated issues.  Informed feedback vs. business interests.

Informed feedback and business interested are NEVER unrelated. That is the only reason feedback is gathered... for business interests.

If a golf course wants to hear the opinion of a group of informed consumers about their course and nothing more, golf course managers would have no problem getting the right people to come play their course any time they want.  

If that were the case they would do it... it is not their area of expertise. There is a reason why so many advertising agencies, PR firms, and research companies exist.

On the other hand, the course ratings published by Golf Digest, Golf and Golf Weekly aren't really about giving golf courses informed feedback (although that is certainly a beneficial byproduct of the process).  They are really more about generating business income and doling out prestige.  

Of course they are about feedback... it's only about feedback. How the feedback is presented or interpreted is another matter. Whether the industry or public affixes status or meaning to the results of the feedback is not under the control of the magazines. They present the information and it is either accepted or it it not. If the industry or public thought the opinions of the panelists were bullshit then the ratings would die on the vine.

Public access courses desperately want to be included on these lists because of the big boost it gives to their business.  Private courses (if they care at all) are interested in them because it makes their courses even more desirable, exclusive and prestigious which enhances value (tangible and intangible) to the existing members.  The publications love the lists because they generate eyeballs and interest every year which translates into revenue for them.  And the raters love them because the process provides them an opportunity to play courses that they would otherwise probably not have access to and/or be able to afford to play.

Agreed... and what is wrong with any of that?

IMHO, the ratings lists are really more about business and only secondarily to do with providing informed feedback.   Since the rating game is largely about money, particularly for the publishers and golf courses...

As with countries, companies, and individuals, it's ALWAYS about the money. Ratings are about business because informed feedback is about business... that's why the feedback is generated in the first place. And, what's wrong with that?

I don't see it as too much of a stretch to consider the raters as being "worker bees" in this moneymaking venture even if they are doing it out of love for the game and a desire to see great golf courses.

So what? My wife's theater enthusiasts get to see lots of shows without paying for their tickets... then she takes their opinion of those shows and (shudder) makes money selling the information to a marketing firm or producer. Her theater goers are the "worker bees" in her money making venture and, again, what's wrong with that? Without them she wouldn't have a business... but, without her they wouldn't get to see the shows and the marketing companies wouldn't have information that they can use to promote their production to the general public. It ain't brain surgery.

Rhetorical thought experiment: What do you think the "fair market value" of a round of golf at each of the top 100 golf courses in America would be if these rounds were made available to the highest bidder?  Big number, right?  Huge number. Scary number.  A rater who is fortunate enough to play these courses gets an awful lot of value for what they do.  I imagine that the publishers could actually charge people to be raters and still have no trouble filling their ranks.

My understanding is that the magazines do charge a fee for individuals to do be a member of their panels (or some of them do, anyway). I know that my wife charges a fee for her enthusiasts to be a member of her "panel." Thank God for capitalism!!!

[Mike_Young]

Kirk,

Sorry for the Mucci-like response, but you have asked a lot of questions here:

I understand and agree with most of what you say.  But I think we are conflating two somewhat unrelated issues.  Informed feedback vs. business interests.

Informed feedback and business interested are NEVER unrelated. That is the only reason feedback is gathered... for business interests.

If a golf course wants to hear the opinion of a group of informed consumers about their course and nothing more, golf course managers would have no problem getting the right people to come play their course any time they want.  

If that were the case they would do it... it is not their area of expertise. There is a reason why so many advertising agencies, PR firms, and research companies exist.

On the other hand, the course ratings published by Golf Digest, Golf and Golf Weekly aren't really about giving golf courses informed feedback (although that is certainly a beneficial byproduct of the process).  They are really more about generating business income and doling out prestige.  

Of course they are about feedback... it's only about feedback. How the feedback is presented or interpreted is another matter. Whether the industry or public affixes status or meaning to the results of the feedback is not under the control of the magazines. They present the information and it is either accepted or it it not. If the industry or public thought the opinions of the panelists were bullshit then the ratings would die on the vine.

Public access courses desperately want to be included on these lists because of the big boost it gives to their business.  Private courses (if they care at all) are interested in them because it makes their courses even more desirable, exclusive and prestigious which enhances value (tangible and intangible) to the existing members.  The publications love the lists because they generate eyeballs and interest every year which translates into revenue for them.  And the raters love them because the process provides them an opportunity to play courses that they would otherwise probably not have access to and/or be able to afford to play.

Agreed... and what is wrong with any of that?

IMHO, the ratings lists are really more about business and only secondarily to do with providing informed feedback.   Since the rating game is largely about money, particularly for the publishers and golf courses...

As with countries, companies, and individuals, it's ALWAYS about the money. Ratings are about business because informed feedback is about business... that's why the feedback is generated in the first place. And, what's wrong with that?

I don't see it as too much of a stretch to consider the raters as being "worker bees" in this moneymaking venture even if they are doing it out of love for the game and a desire to see great golf courses.

So what? My wife's theater enthusiasts get to see lots of shows without paying for their tickets... then she takes their opinion of those shows and (shudder) makes money selling the information to a marketing firm or producer. Her theater goers are the "worker bees" in her money making venture and, again, what's wrong with that? Without them she wouldn't have a business... but, without her they wouldn't get to see the shows and the marketing companies wouldn't have information that they can use to promote their production to the general public. It ain't brain surgery.

Rhetorical thought experiment: What do you think the "fair market value" of a round of golf at each of the top 100 golf courses in America would be if these rounds were made available to the highest bidder?  Big number, right?  Huge number. Scary number.  A rater who is fortunate enough to play these courses gets an awful lot of value for what they do.  I imagine that the publishers could actually charge people to be raters and still have no trouble filling their ranks.

My understanding is that the magazines do charge a fee for individuals to do be a member of their panels (or some of them do, anyway). I know that my wife charges a fee for her enthusiasts to be a member of her "panel." Thank God for capitalism!!!

Michael,
IMHO I think we need to think about this not as just raters but also about theater enthusiast and many other such positions.  Personally I'm not condemning the raters, I'm just telling you it's coming.  When an insurance company sends an agent on a week long trip to Hawaii as a sales incentive he usually gets a 1099 based on a perceived value of the trip, companies are now filing 1099's for airline miles and hotel points and if you win a wide screen TV at your local charity benefit you will receive a 1099.  JMO   Come see us now that you are back in the South.

[Tiger_Bernhardt]

Should pros, architects and other industry guys get a 1099 for reduced rate or comp rounds?

[Mike_Young]

Should pros, architects and other industry guys get a 1099 for reduced rate or comp rounds?

John,
You probably know better than myself but I don't think so.  I don't think anyone should unless it is in trade/barter for a service received.  For example if an architect was to trade his services to ANGC for rounds for himself and/or friends then yes he should receive a 1099.  If he gets a comped round because it a professional courtesy then I don't think so.  IMHO the ONLY reason a course is allowing the rater to play is so they may hopefully receive a rating in a particular magazine. 
Hope you are having a good week.
Mike