How does the IRS tax a baseball?

Question

Will someone please tell this guy before he sells this ball for $500,000 that the IRS cannot tax him on the value of the ball, as the ball is not money, the fan has not received any money for it, and the ball is worth nothing UNLESS the fan actually does indeed sell it. If the IRS thinks it can do such a thing, I doubt it would take much effort for this guy to find an attorney or several who will take his case and successfully argue that he has received no income in relation to owning this baseball. He is being dupped into selling it for a fraction of what it will be worth 5 or 10 years from now.

Answer 1

The ball is a collectible and is taxes as such. He paid zero for it an so the entire price he recieves when he sells is will be taxed as capital gains. If he sells this year they will be short term capital gains which are taxed as regular income but if he waits more than a year they are taxed as Long Term Capital gains. No he will not be taxed untill he sells it. Besides until it has been sold once it has no real value attached to it only guesses as to its worth.

Answer 2

All receipts are gross income unless excluded in the Internal Revenue Code. It does not matter if you receive a car, stock, cash, or even a baseball. The ball has significant value and the gentleman has received real income. The tax attorneys have already examined the issue and you absolutely can NOT make an argument that he has not received anything. The only chance for an argument in tax court is that it is a capital asset and should be taxed at sale or a gift from the MLB. Neither argument has much merit and would most certainly lose. He received a very valuable item and owes his taxes like anyone else. The lsit of items includable in gross income is in the Internal Revenue Code Section 61 and it is exhaustive. The case from a few years ago was entirely different, it did not involve income tax but transfer taxation and it recquired Congress to act in order to find a way around the tax code.

Answer 3

You are right. But if he's not getting official advice, and is just listening to what some kook said and then to other people repeating it, then he's not likely to follow your advice. The IRS hasn't come out and said he owes taxes, it's other people expressing their opinions without much basis in fact. In a similar case a few years back, when similar rumors ran rampant, the IRS Commissioner finally came out with a statement that the idea was crazy.

Remember though that he'd have expenses if he kept it - finding a safe place to keep it, and insuring it. And ten years out, somebody else might have broken the record yet again, and in any case the current hype will have died down some, so it might or might not be worth more then.

Answer 4

from what i've heard, the IRS considers it income, and so they feel they are allowed to tax it. You put up a good argument.

Answer 5

Well said