Cory Youmans may have landed a six-figure tax bill when he caught Aaron Judge’s record-breaking 62nd home run Tuesday night at Globe Life Field in Arlington, Texas.
It all depends on what the vice president of Fisher Investments plans to do with the historic ball: give it to Judge and the New York Yankees, keep it himself, or sell it for potentially millions of dollars. Memory Lane president JP Cohen told the New York Post that the ball was worth at least $2 million.
Media reported Tuesday night that the Dallas man hasn’t made up his mind. Youmans is married to sports journalist and former “The Bachelor” contestant Bri Amaranthus.
keep the ball
The tax rules for caught balls are as confusing as the rules for the inside fly rule. The IRS, which declined to comment, has never stated its position on whether a ball becomes taxable when it leaves the stadium or when it is sold by the fan who caught it. The service only said balls returned to the team are not taxable to the fan.
Some tax experts say catching a ball is a taxable event. They point to a 1969 court case, Cesarini v. United States. A federal judge has ruled that $4,467 found inside an old piano was a taxable “windfall,” much like winning a prize.
H&R Block’s chief tax officer, Kathy Pickering, disagrees.
“In most cases, a fan who simply holds a game-record home run or a player’s 600th home run (for example) generally won’t have to pay tax as long as they hold the ball. “, she told FOX Business. .
If you keep the ball until you die, your estate may owe tax, but Pickering says that only comes into play if your estate exceeds $12.06 million.
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sell the ball
Selling a bullet for $2 million will likely put a single taxpayer or married couple in the top 37% tax bracket.
The actual tax would depend on other factors, including your marital status, family size, income and deductions, and how long you held the ball. Holding the ball for more than a year qualifies for a lower capital gains tax rate, but the IRS has a special “collectibles” tax rate.
Pickering told FOX Business that a ball could be considered a collectible if the game had historical significance.
“In this case, capital gains tax of 28% will apply to the ball if it is held for more than a year. If the holder keeps the ball for less than a year, the ordinary income rates apply to the sale,” she said. The normal rate of capital gains is 0%, 15% or 20% depending on income.
Give the ball to the team
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The issue of baseball taxation was raised in 1998 when Mark McGwire, who played first baseman for the St. Louis Cardinals, tied Roger Maris’ home run record in 1961. A sportswriter asked the IRS if Mike Davidson, the fan who caught McGwire’s record-breaking 61st home run, was liable for the tax.
An IRS spokesperson said Davidson owed gift tax because he planned to give the ball to McGwire. The statement drew widespread criticism from the White House. Mike McCurry, President Bill Clinton’s press secretary at the time, called it “the dumbest thing I’ve ever heard in my life.”
Pickering says the IRS snorted: “While returning the ball to the club may look like a ‘gift,’ thereby subjecting the giver (fan) to possible gift tax if the value is over $16,000, the IRS says returning the ball is more like returning unsolicited merchandise than giving a gift, in which case returning a ball will likely result in no taxable event for the fan.
The IRS quickly backed down, deciding that no taxes were owed.
“Sometimes elements of the tax code can be as difficult to understand as the inside fly rule,” said then-IRS Commissioner Charles Rossotti.
What about the benefits?
Teams often reward fans for returning historical game balls. Zack Hample caught Alex Rodriguez’s 3,000th career fly ball in 2015 and gave it to the New York Yankees. In exchange, the team donated $150,000 to Hample’s favorite charity. He also received two autographed sticks, an autographed jersey and tickets.
Pickering says to be careful — these items are taxable: “Fan season tickets or other items like signed jerseys or balls would be taxable, as would other prizes.”
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Donate to charity
How about donating the ball yourself to a charity, like the Baseball Hall of Fame? Can you claim a deduction?
Yes, but the IRS limits the amount you can deduct each year based on your income. You can carry forward any non-deductible donation for five years, but lose it afterwards, which can make it difficult to deduct a multi-million dollar ball. Pickering advises that you speak to a tax advisor when making a large charitable donation.
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She notes that an appraisal would be required if the ball is donated to charity and has a value over $5,000.
“If the fair market value is unknown or questionable, an appraisal could be a great idea to determine the ball’s gift value,” she said, adding that an appraisal could be helpful in setting a sale price.