Philadelphia of counsel David Shechtman was quoted in a Tax Notes Today article titled “IRS Could Balk at Guidance for Valuing Pro Sports Trades.” The article discusses taxation of player trades in professional sports leagues and the IRS’s lack of guidance on the issue.
David noted that this new change in tax treatment applies to many assets in addition to player contracts, including franchise rights, Federal Communications Commission licenses, emission allowances, distribution agreements, and “other intangibles which often were exchanged [tax-free] under prior law.”
While some major sports leagues, such as Major League Baseball, have asked for guidance from the IRS, David stated that he’s not sure the IRS can offer much of a response. “Because this is a valuation issue, I am not sure what the IRS can do by the way of regulations to help with these issues,” David said. “Perhaps they could devise a safe harbor mechanism for valuing contract rights.”
David also discussed trades involving existing players and valuation before the current tax law was passed.
Read “IRS Could Balk at Guidance for Valuing Pro Sports Trades.” (subscription required)