Tuesday, November 20, 2007
Matt Murphy, a 21-year-old New Yorker, caught Barry Bonds’ record-setting 756th home run ball and immediately sold it for $752,467.20. Murphy acted on advice that he would owe income tax on the ball.
Here is what some of the bloggers on Peter Lattman’s Tax Law Final Exam Question: Barry Bond’s Ball, had to say about Murphy’s tax consequences:
- The Ball Is NOT Taxable Income
The home-run ball is essentially a gift from (pick one, Barry Bonds, The Giants, Major League Baseball) to the recipient…like getting a Bobble-Head prize for attending on Bobble-Head day.
Finding a home-run ball should be viewed like finding any other baseball…it is simply an object worth about $8. Any value others might ascribe to the ball is purely speculative.***
- The Ball IS Taxable Income
Catching a home-run ball is analogous to finding a treasure. It is an “accession to wealth” that is taxable currently. Reg. § 1.61-14(a) provides: “Treasure trove, to the extent of its value in United States currency, constitutes gross income for the taxable year in which it is reduced to undisputed possession.”***
The ball is not a gift because it did not result from “disinterested generosity,” the standard of Commissioner v. Duberstein, 363 U.S. 278 (1960).***
See Robert L. Moshman, Taxing a Windfall Home Run, Est. Analyst (Nov. 2007).