*928 In each of the taxable years petitioner was employed by the Georgia Tech Athletic Association as assistant coach. His duties were to coach the freshman football team of Georgia School of Technology, a part of the University System of the State of Georgia. Petitioner's compensation was paid entirely by the Georgia Tech Athletic Association and the funds of this association were derived from athletic fees paid in by the students of Georgia Tech and from the gate receipts from intercollegiate athletic contests, mostly from the gate receipts of football games. Held, petitioner was not engaged in the performance of essential governmental functions and to tax his compensation would not impose any burden on the State of Georgia. His compensation received from the Georgia Tech Athletic Association is not immune from the Federal income tax.
*1129 The respondent having determined deficiencies in income tax of $39.59 and $39.22 for the taxable years 1932 and 1933, respectively, the petitioner brings this proceeding for the redetermination thereof, asserting*929 the right to immunity from Federal income tax of the salary received by him in each of said years from the Georgia Tech Athletic Association, which was operated in conjunction with the Georgia School of Technology, Atlanta, Georgia. He contends that the salary was received by him as an employee of that institution, a department of the Government of the State of Georgia engaged in an essential governmental function.
FINDINGS OF FACT.
The petitioner is an individual who resides in Atlanta, Georgia, and filed his income tax return for each of the taxable years 1932 and 1933 with the collector of internal revenue for the district of Georgia. He was engaged in 1927 as an assistant coach at the Georgia School of Technology and served in that capacity - coaching the freshman football team, under the supervision and instructions of W. A. Alexander, head coach and professor of physical culture - during each of the taxable years.
The petitioner's coaching duties were customarily performed during the hours from 3:30 to 5:30 p.m., five months in the school year, plus whatever time he was required to do "scouting", which latter depended upon travel distance. His annual salary, paid*930 to him from the funds of the Georgia Tech Athletic Association, sometimes hereinafter referred to as the athletic Association, was $1,000. The remainder of his time was devoted to an insurance firm of which he was an officer and stockholder.
The Georgia School of Technology (hereinafter referred to as Georgia Tech) was founded by act of the General Assembly of the State of Georgia in 1885. By Georgia Laws, 1931, there was set up, and constituted a department of the State Government of Georgia, a board of regents of the University System of Georgia - thereby abolishing the system of separate boards of trustees or directors - vested with the government of the University of Georgia and all its branches, of which Georgia Tech was one. By that act title to all *1130 property theretofore held by the board of trustees or directors was vested in the board of regents.
The athletic department of Georgia Tech (Georgia Tech Athletic Association), with the approval and under the supervision of the board of regents, sponsored and maintained intercollegiate football teams, both varsity and freshman, and numerous other athletics, such as basketball, swimming, boxing, track, tennis, *931 golf, baseball, and lacrosse. This association, headed by Coach Alexander, was managed by a board of directors, composed of six members of the faculty, appointed by the president, who is himself exofficio chairman of that board; three alumni members, appointed by the president; the president of the student council; captain of the football team; and the editor of the college publication, its expressed aim being to secure cooperation of the faculty and students in athletic affairs to the end that every student be afforded an opportunity to take part in some such activity. Intramural activities were also conducted between organizations connected with the college. While athletics, as such, were not a required subject in the curriculum of the college, all freshmen and sophomores, except aliens and those physically unfit, were required to take military and naval training. For such purposes each student was physically examined to determine his fitness. Those found to be physically unfit for this training were given corrective exercises under the supervision of the athletic department.
In addition to the customary matriculation fee there is charged to each student, upon entering, an*932 athletic fee of $3.75 a term or $7.50 a school year, which fee is collected by the bursar and turned over to the athletic association to defray a portion of the cost of maintenance of the athletic department. For this fee the student enjoys the benefits of athletics generally and is entitled to certain tickets of admission to events. The remainder of the association's funds are derived from gate receipts charged for admission to such events, mostly gate receipts from football games. Much the greater part of the funds of the athletic association are obtained from the gate receipts of football games. Such fees and gate receipts are fixed in amounts to meet the annual budget, and are not fixed with a view of making profit. In the year 1927-28, there being an excess of receipts over expenditures, a 10-acre field, among other things, was purchased therewith, to be used for football, softball, football practice, riflery, and golf, title to which is in the University System of Georgia for the use of Georgia Tech. The funds which come into the hands of the athletic association each year are used to pay expenses of the physical education department, such as salaries of instructors in*933 this department, athletic equipment, school hospital equipment, salary of school doctor, maintenance of the school military band, which is used in connection with the Naval R.O.T.C., and salary of bandmaster, and the funds *1131 are also used to help any other department of the school needing aid. No appropriation was made in either of the taxable years by the state for the support of athletics at Georgia Tech. The athletic department, with the fees and gate receipts received by the athletic association, is self-supporting.
Tickets sold to the public in 1932 and 1933 for admission to football games were stamped "Georgia Tech Athletic Association."
Georgia Tech is a member of the so-called Southeastern Conference, composed of a number of different universities. Therefore its athletics are conducted under rules adopted by that conference, requiring that students gain the consent of the faculty before entering intercollegiate athletics. Furthermore, students are limited under those rules as to the number of athletic events in which they may participate. About 65 percent of the students at Georgia Tech are candidates for the several athletic teams, including football.
*934 The program of physical education, including intercollegiate contests, at Georgia Tech is a part of the school's educational program. These activities are determined by the faculty, subject to approval by the board of regents, to which body the faculty reports annually. Alexander, director of athletics, presented proposed programs of activities to the president of the university and in due course the board of directors of the athletic association, including the president, approved them. The petitioner was employed by Alexander, after approval of said board, by reason of his qualifications as a freshman coach, and this board fixed his salary. The head coach decided when, where, and what coaching should be done under the system devised by him and instructed petitioner in detail as to the performance of his duties. The only discretion left to the petitioner was in the method of handling the players on the field and the order in which such instructions should be executed by him.
The funds of the athletic association were separately kept and administered by the secretary and treasurer of the board; its books and records, which were audited by private accountants until 1935, were*935 independently kept and debts were incurred in its own name.
The petitioner duly filed his individual income tax returns for the calendar years 1932 and 1933, in which he disclosed payment to him in each of those years of $1,000 by Georgia Tech, at the same time claiming exemption from payment of the tax thereon. The Commissioner determined that the $1,000 received in each of the taxable years by petitioner from funds of the athletic association was taxable and added it to the income reported by petitioner on his returns.
The petitioner during each of the taxable years was an employee of the Georgia School of Technology, and was an instructor in the internal department of that school known as the department of athletics or Georgia Tech Athletic Association, with the duty of *1132 coaching the freshman football team. The tax proposed by the Federal Government on the salary of petitioner received from the athletic association is not a direct or indirect burden upon the State of Georgia.
OPINION.
BLACK: It is the contention of the petitioner that his employment by the Georgia Tech Athletic Association as assistant coach in charge of the freshman football team, constituted*936 him an employee of a department of the Government of the State of Georgia, and that in the performance of his duties he was exercising an essential governmental function, thereby exempting his salary from payment of income tax thereon. There is no contention that he was an "officer" within the meaning of that word as defined in similar cases.
The respondent, on the other hand, presents several arguments in opposition - (1) that because of the skill required of the petitioner in the duties performed and because of the part time nature of his duties, his relationship was more in the nature of an independent contractor as distinguished from master and servant; (2) that coaching a football team to engage in intercollegiate athletics is not an essential governmental function; and (3) that the tax upon the petitioner's salary imposed no burden upon the State of Georgia.
We sustain points (2) and (3) made by respondent, and find it unnecessary to discuss point (1).
We shall assume that petitioner, as an employee of the Georgia Tech Athletic Association, was thereby an employee of the Georgia School of Technology, and that the Georgia School of Technology is an agency of the State*937 of Georgia. Cf. . However, the mere holding that petitioner is employed by an agency of the State of Georgia does not mean that the compensation which he receives from such employment is immune from Federal taxation. Cf. . The duties performed by petitioner for the athletic association were to coach the freshman football team of Georgia Tech. In performing these duties, we do not think he was engaged in the performance of essential governmental functions. Cf. .
One of the cases cited by petitioner in support of his contention was . That decision reversed the United States District Court for the Northern District of Georgia, which had held on motion, without a hearing on the merits, that intercollegiate athletics, including football, carried out as a part of the program of physical education at Georgia Tech, was not carrying on a governmental function. *938 On reversal by the Fifth Circuit, the United States District Court heard *1133 the case on its merits and found in favor of the regents of the University System of Georgia. The Government then appealed to the Fifth Circuit and that court affirmed the decision of the District Court. See . Writ of certiorari was granted by the Supreme Court. In the meanwhile, Collector Page had died and Collector Marion H. Allen was substituted as petitioner. The Supreme Court decided the case in favor of the Government on May 23, 1938. See We recognize of course that the question involved in that case was not the same as the question here involved. In Allen v. Regents of the University System of Georgia the question involved was the right of the Government to collect admission taxes on football tickets, where the tickets were sold by the Georgia Tech Athletic Association, for admission to football games held under the auspices of the athletic association, while here the question is whether the compensation of petitioner, *939 as an employee of the athletic association engaged in coaching the freshman football team, is immune from taxation. While the questions involved in the two cases are not the same, it seems clear to us that the implications of the Supreme Court's decision in , are against the contentions of petitioner.
Aside from the fact that we hold that petitioner, as an employee of the athletic department of Georgia Tech engaged in coaching the freshman football team, was not engaged in the performance of essential governmental functions, and therefore his compensation is not immune from the Federal income tax, we also hold that a tax on petitioner's salary would impose no burden upon the State of Georgia.
The evidence affirmatively shows that the Legislature of the State of Georgia made no appropriation in either of the taxable years to defray the expenses of the athletic department of Georgia Tech. The evidence shows that this department was sustained entirely by a fund raised from two sources - (1) athletic fees of $7.50 a year paid in by each student of Georgia Tech, and (2) receipts from intercollegiate*940 contests, mostly football games. The latter made up much the larger part of the funds of the athletic association. The receipts from (1) were paid over to the athletic association and receipts from (2) were received directly by it. From this common fund all expenses of the athletic department of Georgia Tech were paid, including the salary of petitioner.
In view of these facts, we would hold that petitioner's compensation is not immune from the Federal income tax even if all other factors were in his favor. If there would be any burden imposed *1134 on the State of Georgia by taxing petitioner's salary under such circumstances, it would be entirely too contingent and remote to justify any constitutional immunity. Cf. ;; ; affd., .
The petitioner, in support of his contention that the athletic department of Georgia Tech is a part of the educational system of the State of Georgia and therefore it is immaterial that it derives its chief support from admission fees to football games, cites*941 the Supreme Court decision in . He quotes the language of the Supreme Court in that case, as follows: "Here the lease to the respondent was an instrumentality of the state for the purpose of carrying out her duty in respect of public schools. To tax the income of the lessee arising therefrom would amount to an imposition upon the lease itself." From this language petitioner argues that the fact that an incidental admission charge is made to athletic contests and the proceeds therefrom furnish the chief support of the athletic department does not affect the tax immunity of the salaries of the employees of that department. Since the filing of petitioner's brief and the citation of the Coronado Oil & Gas Co. case, that case has been expressly overruled by the Supreme Court in . Therefore, if it may be assumed that the Coronado Oil & Gas Co. case did support petitioner's contention, it is now no longer authority.
Reviewed by the Board.
Decision will be entered for the respondent.
OPPER, concurring: *942 While in accord with the conclusion reached in the majority opinion, we feel compelled to record our inability to agree with its discussion of the second point; that is, whether petitioner's duties involve the performance of an essential governmental function on behalf of the State of Georgia. By this we do not wish to be understood as suggesting that a football team is an essential element of a program of higher education or that the coaching of such a team is an inherent part of the process of collegiate instruction. But we do feel that any reference to the character of petitioner's occupation, and especially any discussion of whether or not an instrumentality of the State of Georgia was thereby engaged in the performance of an essential governmental function, is unnecessary for the determination in this case. It is even more evident here than it was in Commissioner v. Gerhardt,304 U.S. 405">304 U.S. 405, *1135 that a tax upon the salary of petitioner would constitute at most a burden "so indirect or conjectural as to be but an incident of the co-existence of the two governments and therefore not within the constitutional immunity." That ground is the only one we*943 consider necessary for the decision of this proceeding.
ARUNDELL, TURNER, and DISNEY agree with the above.