Barry Bonds, homeruns, and taxes
These three items actually have something to do with each other.
As you well know [tag]Barry Bonds[/tag] recently hit his record-breaking homerun and his ball was caught by a 21 year old kid. Last I heard the fan, [tag]Matt Murphy[/tag], was not going to sell the ball.This brings up an interesting issue regarding [tag]taxes[/tag]. According to some tax professionals as soon as Matt caught the ball it became income to him based on a fair estimate of the value of the ball. The ball is estimated to be worth over a half a million dollars. In the top tax bracket this could be a tax bill of over $150,000 for Matt.According to one tax lawyer:
Even if he does not sell the ball, Murphy would still owe the taxes based on a reasonable estimate of its value. Capital gains taxes also could be levied in the future as the ball gains value.
So, according to this lawyer, if he does not sell the ball he will still owe over $150,000 in taxes this year. He is a college kid. Something just doesn’t seem right about this.
Any thoughts?
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Comments on Barry Bonds, homeruns, and taxes »
How can that be? It’s just a baseball! I know, it is worth hundreds of thousands because of the event, but there’s no set value for its worth until it is sold. How can the IRS set a extremely high value on an object which has a technical value of just a few dollars?
If he does have to pay taxes, he will probably change his mind on selling it. And that doesn’t seem fair.
Does this apply to all sports memorabilia? If I had some minor leaguer autograph my baseball cap and then they later become famous, am I liable for taxes even if I never sell it? If so, that’s crazy…
@Beepo
I agree, it is pretty crazy - The IRS wants their money!!
It will be interesting to see what happens with all this - I will try to stay up on it.
Is this a joke? If not, I really pity this guy. A joy turned into a financial nightmare
@odysseus99
The debate among tax professionals surely isn’t a joke, I hope it does work out well for the kid - I am sure it will, even if he has to sell the ball to pay his taxes - he will get a nice chunk of change…
Wow, that is unbelieveable!
In NZ at the moment, the government are introducing a capital gains tax on things like houses and the like. At the moment, the housing market is booming (although that may change due to what is currently happening to the NZ dollar), and as a result, most homeowners have seen their house values double.
Surely, if there is a tax bill, common sense would mean that the tax would be applied after sale? In NZ, even if a capital gains tax is introduced, it will be settled after a sale.
The ball would only be taxed on its value and the buyer decides what the value is. If he buys it for 100,000 dollars then you are taxed on that. How can you be taxed on a ball that was sold to MLB for 1.00 and they belive (IRS) that it is now worth 500,000 dollars. They have power but not that much power. You are taxed on the sale not the what if he sold sale.
@Taxman
Well, I like that answer the best. That seems the most reasonable to me - thanks for the insight.