83°F12:20 PM Fan who caught Jeter’s 3000th hit gets a visit from the IRS [The Arena]
Every once in a while, a little news story catches our eye, reminding us of just what a wonderful country we live in. Some minor vignette of Americana that reinforces that modicum of patriotic zeal that courses through the veins of every loyal citizen.
Such was last week’s story of 23-year-old Christian Lopez, the Verizon salesman from Highland Mills, New York, who caught New York Yankees' Derek Jeter's 3,000th career hit ball last Saturday. Lopez recovered the prized ball his father fumbled after The Captain hammered it into their section of the stands in the third inning of the Yankees' win over Tampa Bay.
And here’s the heart-warming part: Lopez decided not to keep the ball—as was his right—but instead gave the ball back to Jeter, whom he called an "icon.” The fan’s actions certainly constitute a shining example of the selflessness and sportsmanship that has made America what it is today.
The story gets better. The specially marked home run ball Lopez returned to Jeter was estimated to have been worth about $250,000 to $300,000 at auction. How do we know this? Well, it seems Mr. Lopez has been contacted by a friendly representative of President Obama’s Internal Revenue Service (Perhaps one of the 16,500 new IRS agents proposed for enforcement of the new ObamaCare law?).
According to the tax man, Lopez will owe around $13,000 in income taxes on the gifts he has received from the Yankees (free seats, meals, prizes, etc.) because he caught Jeeter’s ball. Additionally, he may have to pay a gift tax on the value of the prize ball, because it legally belonged to Lopez for a few seconds, before he “gave” it to Jeeter. Under IRS regulations, the “donor” of a gift may be held responsible for gift taxes of up to one-half the value of the “gift.”
Mr. Lopez—a college graduate who majored in Government—told the New York Daily News: "The IRS has a job to do, so I'm not going to hold it against them, but it would be cool if they helped me out a little on this."
Despite evidence that taxation promises to eclipse baseball as the National Pastime, this is still a wonderful country. Isn’t it?
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Silly
Thomas, Thomas, Thomas,
The IRS agents aren't any of the proposed ones because they are just proposed. None of them have been hired because the Republicans have insisted on LESS enforcement of tax law as part of their "starve the beast" strategy of killing off the federal government.
And by "Obama's IRS" I assume you mean that it is vicious now and wasn't before? I'm trying to think of a time when the IRS had a warm and fuzzy feel to it!
But at the end of the day, you know this dude isn't going to have to pay tax on a $250,000 ball he didn't keep. And if he has gotten so many free gifts from the Yanks that the taxes on them would be $13,000... then he should pay! Just like you pay taxes on a car you win in a raffle!
Taxes are not evils.
Taxes are EVIL
Taxes are for sure EVIL...you must live under a rock! IRS has no business contacting the receipient of the Yankee memrobilia until after the Yankess have goven him a Form 1099 for the value of the items. This is severe over-kill from IRS and it should have a significant backlash too, maybe someone will reign in the Revenuers at some point to stop the harrassment. Let's hope so!
Jeter ball
However, if the IRS wants to claim Lopez "gifted" the ball to Jeter, he will have no gift tax to pay because under the tax law Obama passed in December, the first $5,000,000 of gifts in 2011 and 2012 are exempt from gift tax (although Lopez will have to file a gift tax return to report the exempt gift). Additionally, if the IRS contends Lopez gifted the ball to Jeter, then what the Yanks are "paying" Lopez is also a gift from the Yankees, not compensation for "selling" the ball back. Therefore, he should have no taxes to pay. Lopez should hire a good accountant or attorney to fight the IRS for him.
Lopez can "gift" the ball to
Lopez can "gift" the ball to Jeter. No taxes owed on that transaction. However in order to "gift" something you must own it. So by his action of getting the ball he has a taxable event occuring(even if getting the ball was a gift from the Yankess it is gifted at their basis with unrealized capitol gains up to fair market value).
I believe it should work that the ball was gifted to Lopez(with unrealized capitol gains, basis of ball $5 vs fair market value $200,000). Upon gifting it to Jeter, he realized a gain(gifts received back(tickets, etc) less the basis of $5). So it will be a realized personal capitol gain.
However the IRS will take the position that it is income of full FMV to try and collect more taxes until the media and politicians make them back down. See the case of Mark McGuires record setting ball.
A no tax position you propose will most likely not stand up in tax court based on all the prior tax cases similiar to this one.