Then the IRS would be forced to pay him money, and the hall of fame would have the ball.
2007-08-22 02:01:21 · 7 answers · asked by Richard M 1 in Business & Finance ➔ Taxes ➔ United States
He isn't being taxed on it unless he sells it. The announcement that he would be came from one tax lawyer who apparently wanted publicity, not from the IRS who have made no comment. In a similar instance years ago, when someone lower down in the IRS had expressed that opinion, the IRS commissioner came out with a statement that that would be crazy. So check your sources.
Since he's not being taxed on it, the rest of your question has no meaning.
2007-08-22 03:26:20 · answer #1 · answered by Judy 7 · 1⤊ 1⤋
First, the argument of why it should be taxed is the "door prize" theory. If you attended a function, and they gave away a door prize, in this case the BB 756 ball, you would be taxed on it. The ballgame is very similar. Whoever catches the ball has won the prize.
So what was the ball worth. Probably $10 before it became 756 ... but the instant the ball passed over the fence, it became worth an estimated $500,000.
That is the argument on how/why it should be taxed.
As to donating it to charity and taking a tax writeoff. The problem is that the tax deduction for non cash contributions to public charities are limited to 30% of your AGI.
So absent other income, he would have $500,000 income, a $500,000 charitable contribution ... but could only deduct $150,000 from his tax return. He would then be taxed on the $350,000 difference.
He would be allowed to carry over the $350,000 contribution to future tax returns ... up to 5 years.
Hope that explains both issues.
2007-08-22 02:34:01 · answer #2 · answered by CPA/PFS 2 · 0⤊ 1⤋
A tax deduction is only worth the value of your marginal tax rate which, in this case, approaches zero. There would be no advantage to a poor student who needs the money.
2007-08-22 02:38:23 · answer #3 · answered by Anonymous · 0⤊ 0⤋
It wouldn't work. The deduction for charitable contributions is either the fair market value OR the original cost whichever is lower. Since he didn't pay for it he can't deduct any contribution but would still be taxed on the income. Even if he paid $500,000 for it originally he would only be able to deduct less than 50%.
2007-08-22 03:12:40 · answer #4 · answered by ignernt 3 · 1⤊ 1⤋
I don't think that there is any value that can be taxed on that ball until cash is received.
But your idea is smart. The only thing is he may not owe enough taxes to off set what he would get for a deduction for donating the ball.
2007-08-22 02:17:38 · answer #5 · answered by Floyd B 5 · 0⤊ 2⤋
There is no tax writeoff as he has no basis or cost in the baseball, so his "deduction" would be zero
2007-08-22 02:49:28 · answer #6 · answered by Craig T 6 · 1⤊ 1⤋
why should he be forced to give it up to anybody. he caught it. if barry bonds didn't want it then why should the irs or anyone else have it.
2007-08-22 02:23:38 · answer #7 · answered by morningstar6707 5 · 0⤊ 1⤋