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8/22/07 Yahoo article says that fan (Matt Murphy) will have to pay taxes on potentially valuable baseball.

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."

I think this was bad advice. Doesn't it make more sense that he'd pay taxes only WHEN he sells it, otherwise who and what determines taxable value?

If he inherits stock from a relative, he doesn't have to pay taxes on it until he sells it.

Am I looking at this the wrong way?

2007-08-22 10:15:55 · 4 answers · asked by dave78m 1 in Business & Finance Taxes United States

4 answers

The gentleman who caught the ball DID make money. He now has an asset worth considerable money. The IRS taxes all income of any kind under Section 61 of the internal revenue code. The only receipts which do not count as income are those which are specifically excluded in the code. Prizes and buried treasure are specifically taxed in the Internal Revenue Code. The reason you do not pay tax when you inherit is that inheritances are specifically excluded as income under the Internal Revenue Code. Without an exclusion then any money received is gross income. Under certain circumstances the donation of a prize to charity may qualify for exclusion of income but the ball probably does not qualify as a prize under Section 74 of the code. If it is not a prize but ordinary income then he may donate it to a qualified charity and take a deduction but the deduction has limits. Typically a cash donation to a public charity is only deductible up to 50% of your income. A gift of appreciated property has even lower deduction limits. If the gentleman has earnings less than the value of the donation then he could still incur some tax. He does however have the chance to carry over the unused deduction for up to five years and apply it to future tax years. The difference between this case and the baseball case from a few years ago is that the prior case did not involve income tax but gift tax. The fan intended to give the ball to the player and therefore would have made a gift in excess of the exclusion amount and would be required to pay gift tax for giving a gift. Actually he could probably use lifetime credits and not actually pay but would need to file a Form 709 and use some of his available credit. The public was outraged at the idea and Congress quickly pressured the IRS into finding way around the gift tax issue in that case.

2007-08-23 03:10:43 · answer #1 · answered by Anonymous · 0 0

He doesn't have to sell, and it IS bad advice. The information isn't coming from anyplace official like the IRS - in fact, a few years ago in a similar situ8ation, when similar rumors were rampant, the IRS Commissioner made a statement saying essentially that the idea was crazy.

He'll pay taxes on the sale. I can't feel real sorry for his sad plight at having to sell it and ending up with several hundred thousand dollars after tax though. Almost sounds today like he's playing to the media with his comments about really wanting to keep it but (sniffle sniffle) being forced to sell by the big bad IRS - playing to the media as much as the goofy lawyer who initially made the statement about his being taxed even if he kept it..

2007-08-22 10:43:36 · answer #2 · answered by Judy 7 · 1 0

There are some legal issues regarding it but i think i remember them saying something like the ball isnt a piece of history anymore, its like a house , the house is worth a lot of money so u have to pay taxes on it.

so u have the ball, the ball is worth a lot of money so u have to pay taxes on it. I dont understand the legalities myself but i think he will get charged less taxes if he sells the ball.

2007-08-22 10:35:54 · answer #3 · answered by Anonymous · 0 1

why cant he just donate it and then not have to worry about the taxes on it?

2007-08-22 10:44:49 · answer #4 · answered by musicgrl42002 5 · 0 0

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