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Steve Ballmer Gets Billion-Dollar Tax Write-Off For Being Basketball Baron
McGruber (1417641) writes "According to a report published by The Financial Times (paywalled), ex-Microsoft CEO Billionaire Steve Ballmer will be able to write off about a billion dollars of his basketball team's purchase price from the taxable income he makes over the next 15 years. "Under an exception in US law, buyers of sports franchises can use an accounting treatment known as goodwill against their other taxable income. This feature is commonly used by tax specialists to structure deals for sports teams. Goodwill is the difference between the purchase price of an asset and the actual cash and other fixed assets belonging to the team."
What kind of loser watches other people play games?
Slashdots "Eat the rich" attitude alive and well.
Yet, under any serious scrutiny, this makes complete sense.
Direct from the IRS:
http://www.irs.gov/Businesses/...
Summary: Most of the value in a sports team is in "intangible" assets. Sure, the stadium can be appraised and valued at X. But what are the players contracts worth? The teams name? How much did the previous owners actions damage that name? Etc... And every owner is going to argue tooth and nail that they lost money on the deal. So much so that the IRS finally just allowed them to claim the sale is worth a flat percentage of the selling price. This way they at least get some money and avoid a decade of legal battles to get it. They do the same sort of thing with dozens of other businesses.
Don't like it? Support a flat use tax. No deductions for loss.
> This is not $70 millions in non-taxable charities, but an investment on a money machine in the sports/entertainment industry.
Yes, he bought a business, so he'll pay income tax on any income that is generated. If he buys T-shirts for $10 each and sells them for $25 each, that's a $15 profit he'll be taxed on.
If he buys hot dogs for $2 and sells them for $8, that's a $6 profit on which he'll pay taxes.
If he buys a team for a billion dollars and over 15 years he gets his billion back plus $500 million more, that's a $500 million profit he'll pay taxes on.
The billion he apent buying the team is money he ALREADY earned from Microsoft, so he ALREADY paid taxes on it. Of course he doesn't have to pay income taxes on the same money again when spends it on a team. It's INCOME tax, not SPENDING tax. The article is just clickbait for the uninformed and gullible, silently assuming he should have to pay income tax over and over on the same money. How many times he should be taxed on that money the author doesn't say.