Sponsorship and Donation

Isn't there some organization that is arranging the race, and that the donations and sponsorships go to? Or the team is an organization of some kind? Donations should be made directly to the team or organization, not to your son or to you. Whether the donations are tax deductible by the donors depends on the nature of the organization, but that's not your problem.

We need much more clarification on what is happening.

If this is not part of a charitable activity or organization, then anything of value (money, merchandise) that your son receives for performing a service is considered self-employment income.  He would be required to keep accurate business records of income and expenses, and pay self-employment tax and income tax on any net profits (income minus expenses).   If your expenses are more than your sponsorship income, then you don't have a taxable profit, and he does not need to file a tax return, but you will need records to prove this in case of audit.

If this is part of a charitable activity (including activities sponsored by public schools, non-profit private schools, and town or county rec leagues), donations and sponsorships should go to the organization to be passed on to participants, and not made to your son personally.

Generally, I think we need a lot more information.