Partner Carl Fortner is quoted in a Bloomberg Tax article, “Sports Team Trades: An Unexpected Casualty of the New Tax Law,” about the possibility that sports teams will face higher upfront taxes on player trades as a result of the GOP’s recent tax overhaul.
Fortner said how to value player contracts and determine the amount of gain or loss to report to the IRS is a big issue for sports teams under the new tax law, which restricts the use of like-kind exchanges under the tax code to real property.
But he also said the cost of losing like-kind exchanges for sports teams may be relatively small, especially when considered on a net basis. “If you do have to recognize gain on a player contract, you get a tax basis in that player contract and you can amortize over the life of the contract,” he said.
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