you know that guy that caught that ball and the irs wants to tax it?

Question

What if he burns it? And are they still gonna tax it? Were they even ever? What if a 5 year old caught it instead, can they tax 5 year olds?

Answer 1

The IRS wants to tax it? Read the articles again. The IRS didn't say that, one idiot tax lawyer who wanted some publicity did.

The IRS hasn't said anything about it. Some years back in a similar situation, when the question was posed to one IRS manager he said that it might be taxed - the IRS commissioner came out with a statement then that it wouldn't be.

If and when he sells it, there would be capital gains tax assessed just like on any other asset sold.

If a 5 year old caught it and sold it, then sure, the 5 year old would owe taxes.

Answer 2

Most tax professionals do not believe that he would owe any tax until the ball was sold. The IRS does not have any official opinion on the issue and no court has made a ruling. Catching a ball at a baseball game (unlike football) is part of the traditional experience for which you paid a price for the ticket. The basis in the ball would therefore be that ticket price. Like any other property that you own, if you sell it at a gain you will owe tax on that gain. I have not heard nor read about any knowledgeable person giving any authority for taxing the property upon receipt. The only thing that I could imagine would be the rule for people that win prizes at a game show. I do not think that it applies nor do I think that the IRS is going to test that position in such a rare event as the Bonds case. If they did and the person that caught the ball was a 5 year old, the rule would apply just the same.

Answer 3

First off, the IRS has NOT stated that they have any intent to levy any tax on that ball. One tax attorney, probably more motivated by free publicity than anything else, has rendered an opinion that it is taxable. Most tax pros do not agree with him, by the way.

Although technically the IRS could tax the ball before it's sold, they MUST be able to use reasonable and prudent methods to establish a value. If it was a door prize or some found property of large value, that would be easy. Or if it was a Mickey Mantle rookie year baseball card still in the wrapper there are plenty of guides that can be used to determine the reasonable value.

However this is a truly once-in-a-lifetime event. There are no comparable items of known value that could be used to establish a baseline value for the ball. Any value that anyone puts on the ball is no more than a wild guess, at least until it is sole to the highest bidder. Once that happens, the IRS will certainly be in the wings to collect their cut.

Answer 4

Although the IRS may not pursue it, the attorney makes a vaild arguement. IRC section 61 classifies EVERYTHING as income unless the code provides an exemption.

Why do you have to pay tax on the value of a car you won in a raffle if the ticket cost you five bucks?

The value you pay ordinary income tax rates on becomes your basis. Any gain or loss from that point is a capital gain. In the case of the Bonds ball it will be taxed at 28% (if it is held for more than one year) because it will be considered a collectible.

There is no case law on the subject as most of the items like this are sold immeadiately.

Answer 5

Of course they can tax it. It's income.

Despite some talk to the contrary, they won't tax it until he realizes the gain by selling.