Bonds' 756th ball going to auction td.yspwidearticlebody { font-size: 13.5px; }By Janie McCauley, Associated Press Writer August 22, 2007 SAN FRANCISCO -- No. 756 is going to auction. Barry Bonds' record-breaking home run ball will be sold online, and fortunate fan Matt Murphy figures to be a half-million dollars richer. The 21-year-old New York man said Tuesday he had no choice but to sell the ball — several people told him he would be taxed on the souvenir just for holding on to it. "It wasn't hard. It was simple math. I'm upset by the decision I had to make," Murphy said. "I wanted to keep it. I'm young. I don't have the bank account. ... It would have cost me a lot more to keep it." http://sports.yahoo.com/mlb/news?slug=ap-bondsball082207&prov=yhoo&type=lgns
I've heard people talking about that, but it makes no sense. If he doesn't sell it, it's value is nothing more than what MLB paid for it. Seems like it wouldn't be taxed until it is sold. I doubt all those people who have valuable memorabilia are taxed on it. It doesn't add up.
It's entirely counterintuitive, but the tax lawyers that say he'll be taxed on the ball are probably right. The VALUE of the ball should be in dispute. In a nutshell, all income from "whatever source derived" is taxable, unless there is an exemption. The courts have ruled that the standard also includes any accession to wealth over which the taxpayer has complete dominion. In this case, that would likely include the ball. I think people get hung up on the fact that it's non-cash income (at this point) and that he should only be taxed when he sells the ball. Of course he will be as a capital gain, and the amount of that tax will be determined by the difference in sales price v. the amount it was appraised at for this year's tax (the "basis" of the ball.) Consider that bartering is always taxed. So if you have a doctor that does a surgery in exchange for a plumber fixing his bathroom, each person is taxed on the value that they received in the transaction.
It should not be taxable because it is not income and he did not purchase it. But I realize that does not mean squat with the IRS.
The tax atty they had on ESPN radio said it was basically like receiving a $750K gift. If he wants to keep it and put it on his mantel he owes the taxman like $200K in taxes. I agree that the damn ball isn't worth anything until someone pays him for it.
How about if he uses the ball to secure another purchase (e.g. collateral)? Or trades the ball for non-cash?
how about bonds prove he is the great guy his supporter think he is and pay the taxes on it so the guy can keep it?
2 reasons. One, he doesn't pay his own taxes, let alone someone elses B. The IRS would probably then say that the 200k that Bonds paid is also a gift, and he needs to pay taxes on that as well.
How would that be any different from owning a signed football by a famous player or rare baseball cards. Are those items taxable, too? I guess if the IRS doesn't know about it, it's ok to have these valuable items. Once they find out you have it, you're screwed.
