A 23-year-old New York Yankees’ fan probably wasn’t thinking about the IRS when he retrieved the ball Derek Jeter hit to tally his 3,000th career hit. However, the tax repercussions the fan could face for gifts received upon returning the ball to the Yankee club have garnered some curiosity.
In exchange for the fan’s generosity in returning the ball, the Yankees asked the fan what he wanted in exchange. The fan asked for signed memorabilia – team jerseys, balls and bats signed by Jeter – and the Yankees agreed. Since the team knew the value of the ball far exceeded the fan’s request, the team gave him multiple premium seats to games for the rest of the season.
Those gifts, in addition to the pricey game tickets, have an estimated value of between $44,000 and $74,000, depending in part on how far the Yankees play into the postseason. They will likely be considered taxable income, according to a tax professor.
One tax analyst said even if the gifts’ value was determined to be just $50,000, the fan’s tax bill for those items could run somewhere near $14,000.
A Columbia law professor, who helped the IRS decipher the worth of Mark McGwire’s 1998 home run ball, which a fan kept and later sold for $3 million, said the Yankee fan’s tax bottom line may come down to whether the ball club considered the Jeter ball exchange a gift or a prize.
For the cell phone salesman, who already has $100,000 in student loans to pay, that final determination maybe important.
While this situation happened in New York, it is not unimaginable for something similar to happen at a Texas Rangers game or a Dallas Stars match. It will be interesting to see how the IRS decides to classify the tickets and paraphernalia the New York man received from the Yankees.
Source: The New York Times, “Returning Jeter’s Big Hit: No Good Deed Goes Untaxed (Perhaps),” John Leland, 11 July 2011