Tuesday, July 12, 2011

Is the Tax Man Coming For Christian Lopez?

This one comes from the no good deed goes unpunished category via John Leland:
Here is the fan’s fantasy: You go to the ballpark and under a picture-perfect sky not only do the Yankees win, but in recognition of your exemplary behavior, the team also showers you with free season tickets, signed merchandise and a personal audience with the Yankee-est of Yankees, Derek Jeter. The team president hands you his card, with his e-mail address.

And here is the reality: The taxman may own a piece of your windfall. And not in tickets, either. He takes only cash.

For Christian Lopez, the 23-year-old fan who came up with Jeter’s 3,000th hit at Yankee Stadium on Saturday, the ramifications of his gift from above are as American as baseball, hot dogs and taxes.


“There’s different ways the I.R.S. could try to characterize a ball caught by a fan in the stands,” said Andrew D. Appleby, a tax associate at the Sutherland Asbill & Brennan law firm in New York who has written about the tax implications of souvenir baseballs. “But when the Yankees give him all those things, it’s much more clear-cut that he owes taxes on what they give him.”

... the Yankees gave Mr. Lopez four Champions Suite tickets for their remaining home games and any postseason games, along with three bats, three balls and two jerseys, all signed by Jeter. For Sunday’s game the team gave him four front-row Legends seats, which sell for up to $1,358.90 each.

In such gratitude begins tax liability, said Paul Caron, a tax professor at the University of Cincinnati law school and author of Tax Prof Blog.

He recalled a 2004 incident in which Oprah Winfrey gave 276 cars to the audience of her show, who were surprised to discover they incurred tax obligations of around $7,000.

“Pretty clearly he’s going to have to report as income the value of all the stuff he got for the ball,” Professor Caron said.


The tickets to the 32 remaining home games (after Sunday) have a combined face value of $44,800 to $73,600, according to the team’s Web site. The tickets could be worth a lot more if the Yankees play deep into October. Steven Bandini, a tax partner at the accounting firm Zapken & Loeb, said that if the items were valued modestly at $50,000, they would probably carry a tax burden of about $14,000.


Mr. Lopez said if he had to pay taxes, he hoped he could borrow from his parents rather than sell his memorabilia.
So now, someone who already owed $100K, will likely have to fork over another $14K to the Tax Man, and all because he wanted to be a good guy and do the right thing. Like I said yesterday, nobility and honor only get you so far in this world, and in this case it gets you to about $114K in debt. Enjoy spending the next 20+ years of your life paying that off.

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