Bonds' homer ball creates tax controversy
Questions like, "Does tax get assessed as soon as the ball is picked up?" and, "Do the capital gain tax rates come into play if the ball is held for more than a year?" and, "Is the owner entitled to claim a tax loss if the ball loses its value as a result of the controversy over Bonds' alleged use of performance-enhancing drugs?" are overshadowing the athletic feat that gave the ball its value in the first place.
Tax professors are already preparing exam questions based on the event, and, for now, at least, the controversy over the timing of any tax that might be assessed can continue to boil since the IRS is not making any public statements as to how the matter should be treated.
Matt Murphy, a 21-year-old Mets fan, took his share of the Bonds spotlight as soon as he emerged from a melee in the stands with the ball in his hand. Speculation is that the ball is worth approximately $600,000 and that Murphy could be liable for over $200,000 in income tax on his 2007 tax return, even if he chooses to hang on to the ball.
Those who claim the ball should be taxed immediately, as opposed to waiting until the owner receives proceeds from selling the ball, claim that ownership of the ball qualifies as "accession to wealth" and that results in immediate taxation.
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