Following up on yesterday’s post, Tax Consequences to Fan Catching Derek Jeter’s 3,000th Hit: New York Times, Returning Jeter’s Big Hit: No Good Deed Goes Untaxed (Perhaps), by John Leland:
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. As in Las Vegas, the house always wins.
“There’s different ways the IRS 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.” …
[T]he 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. …
Michael J. Graetz, a law professor at Columbia University who advised the I.R.S. on how to treat the McGwire ball, questioned whether the booty was not a gift, and therefore not taxable. “The legal question of whether it is a gift or prize is whether the transferor is giving the property out of detached and disinterested generosity,” Professor Graetz said. “It’s hard for me, not being a Yankee fan, to think of the Yankees as being in the business of exercising generosity to others, but there’s a reasonable case to be made that these were given out of generosity.” …
Alice McGillion, a spokeswoman for the Yankees, declined to say whether the team would give Mr. Lopez money to meet any tax liability, saying only, “Yankee partners and partnership always comply with the tax laws.”
Mr. Lopez said if he had to pay taxes, he hoped he could borrow from his parents rather than sell his memorabilia.
Update:
