Saturday, May 3, 2014
Donald Sterling may be facing a large tax bill if the forced sale of the Los Angeles Clippers goes through. Many commentators have made predictions of the possible tax consequences. Many believe that having to pay capital gains tax and losing estate tax benefits will result in a large bill. One commentator has suggested that Sterling may be able to avoid having to pay taxes on the sale today by claiming involuntary conversion. The suggestion is based in Section 1033 of the tax code, and would give Sterling two years to purchase similar property, such as a professional sports team in a different sport. Another suggestion is that Sterling may be able to gift the Clippers to his wife and avoid taxes if rather than a force sale Sterling is only required to no longer be the owner.
See Dean Zerbe, How Clipper’s Sterling Could (Maybe) Avoid a Tax Bill Today, Forbes, April 30, 2014.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.