Tax Docket

European golf tour officials are in talks with the British government about changing certain tax laws that may deter top golfers from competing in this year’s Ryder Cup. The recent rules issued by the HMRC (HM Revenue and Customs) allow the agency to tax endorsement and sponsorship earnings as well as player winnings. The agency’s rules have deterred Jamaican sprinter Usain Bolt from competition’s in Britain.

Andre Agassi lost a landmark case against the agency four years ago regarding these rules and regulations. In light of the court’s ruling in this case, for example, if an athlete competes 40 percent of the time in Britain, that athlete’s global endorsement earnings can be taxed 40 percent.

AP: Tour Officials Hampered by UK Tax Rules

From Forbes, Did Tax Ploy Help Saints Win Super Bowl?

In a just-filed U.S. Tax Court lawsuit, the partnership owning the Saints acknowledges that it didn’t treat an $8.5 million annual payment from the state of Louisiana as income and therefore didn’t pay taxes on the sum. Rather, the team said the money was an addition to “working capital” and a nontaxable transaction.

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According to the lawsuit, the $8.5 million was one of a series of “inducement payments” starting in 2001 for 10 years to keep the National Football League team in New Orleans. The lawsuit says, the money was to be used, among other things, to “acquire additional and higher-priced player contacts” to make the team “more competitive in the NFL.”

The Internal Revenue Service is auditing the University of Georgia regarding income from activities unrelated to teaching students. These activities include revenue made from catering, parking services or other activities outside the college’s core teaching activities.

In a quote from the In Atlanta Journal Constitution, a University official stated:

“They are auditing us in these areas,” UGA spokesman Tom Jackson said Wednesday. “We’re answering all their questions, and the main issue we’re dealing with is the unrelated income.”

The Associated Press is reporting that Ryder Cup player Soren Hansen has been fined nearly $1.1 Million for tax evasion:

The Copenhagen City Court says Hansen was found guilty of tax evasion from 2002 to 2006. He had claimed residency in tax-haven Monaco during the period.

The court on Wednesday ruled Hansen actually lived in Denmark and avoided Danish taxes.

It was unclear whether the ruling would be appealed.

The 36-year-old Hansen has represented Denmark in the World Cup five times.

In 2007, he reached the top 50 in the world rankings and became the top-ranked Danish golfer. A year later, he represented Europe in the Ryder Cup.

Minnesota lawmakers have unveiled a $791 Million plan to build a new stadium for the hometown Vikings. According to the Minneapolis Star Tribune, the sources of revenue for the stadium are “a 1.5 percent hotel surtax, a nearly 7 percent fee on jersey sales, a sport-themed lottery ticket and a rental car tax”  which would bring in $31.9 million a year.

KSAX
Pro Football Talk
Bleacher Report
Minnesota Public Radio

A new tax law in Tennessee is not finding favor with one Detroit Red Wings player. Brian Rafalski, a defensman for the Red Wings, says that Tennessee is unfairly taxing professional athletes that play in the state. Rafalski has estimated that 17 of his teammates will be paying more in taxes to face off against the Nashville Predators than they will earn for actually playing the game.

The Tennessee law is what is commonly referred to as a “jock tax” and is charged to make money off of highly paid athletes that play for the visiting team. Approximately 18 states now charge this type of tax. Specifically the law attempts to tax NBA or NHL players that play for the visiting team for more than 10 days in a tax period and within Tennessee’s boundaries.

NBC Sports

If you are a sports fan, you may have spent countless hours looking at stats, crunching numbers, and watching games from this season in order to fill out your 2010 NCAA Men’s Basketball Tournament Bracket. Regardless of the method to your madness, PayScale.com took a unique approach to determining this year’s champion. The online line leader in global compensation data filled out a bracket and advanced teams based on the school’s average alumni salary. This year’s champion: Duke. Check out the site’s Sweet Sixteen below. The full bracket is available at this link PayScale’s NCCA Bracket Predictions

Calendars, bobble heads, t-shirts, hats, baseball bats, and ponchos are a few examples of items that home teams will give to fans on game nights. On March 5, 2010, the New Jersey Nets are teaming up with the Roni Deutch Tax Center to provide New Jersey residents 18 years and older who attend the New Jersey Nets-Orlando Magic game at the Izod Center with a coupon for preparation of a free state tax return.

Further, the Roni Deutch Tax Center will have representatives on site at “Nets Tax Night” on March 5 to answer questions relating to taxes prior to and during the game. Nets fans who attend home games other than the March 5 game will receive a $50 off tax preparation coupon in the Nets game program redeemable at a Roni Deutch Tax Center in Hackensack, Bergenfield, and Fair Lawn.

New Jersey Nets Press Release

With scenarios aplenty, there is no question that this summer’s NBA free agency period is pivotal for franchises looking to contend for an NBA championship over the next few years. LeBron James has been the center of this free agency buzz. Analysts have drawn up scenarios that would land James in New York, Miami, or remain in Cleveland. Each analyst has his or her own rationales for James choosing one team over the other, such as current team roster, chances of winning a championship, and endorsement opportunities. Well, this post will consider the tax implications of James’ free agency move.

Under the NBA collective bargaining agreement, Cleveland has the ability to offer James the most lucrative contract. His starting salary will be the same wherever he plays, however, Cleveland can offer him an additional year (six instead of five) with larger pay increases (10.5 % instead of 8%). The offer has been estimated to amount to $125.5 million over six years. Other teams can offer about $96.1 million over five years.

For sake of comparison, lets assume James’ deal is a five year deal wherever he lands. Therefore, his deal with Cleveland would amount to about $100.2 million versus $96.1 million that the other teams can offer. While these deals are close monetarily, depending on where James plays he may be subject to state income tax (other taxes may apply such as higher sales taxes, property taxes, and other states “jock” taxes* but those are outside the scope of this post). Let’s take a look at the tax implications of choosing Cleveland, New York, or Miami.

Cleveland. Home is where the heart (and where the money) is. Certainly James is strongly considering remaining home in Cleveland. Not only is Cleveland his hometown, it is where he can make the most NBA money. However, James will continue to pay approximately 6% in state income taxes. Further, several cities levy municipal income taxes which could raise his tax liability. These taxes are in addition to his federal income tax liability. Therefore, while James will see a bigger gross amount on his pay check, he will be giving at least 6% of that income to Ohio.

New York. For James, a move to the Big Apple could mean big endorsements, but it also means big taxes. New York ranks at the top in regards to percentage of income that is subject to state taxes. James could be subject to a 9% state income tax in addition to his federal tax liability. While he may see greater returns from endorsements, he will also see a greater amount of those dollars going to the Empire State.

Miami. A move to South Beach yields James the best scenario in tax savings. Florida has no state income tax. This mean that James’ Miami salary would only be subject to federal income tax. Further, James could take the part of his salary that he would have had to hand over to Ohio and New York and donate it to the charity of his choice (assuming the charity meets the requirements for the charitable deduction under the Internal Revenue Code) and reduce his federal tax liability with use of the charitable deduction.

We can only wait until the start of free agency to get a better picture of where James and the cast of free agents ultimately decide to play in the future. However, as far as tax savings are concerned, Miami is a slam dunk.

*A jock tax refers the levying of state and local income taxes on traveling business professionals, particularly visiting professional athletes. Jock taxes require that traveling professionals pay income taxes in every state where they earn income or have an “economic nexus.” – Tax Foundation