I should really master linking my blogs to my sources, but I’m too lazy.
I have been puzzled by the determination that Matt Murphy will be taxed on the perceived value of a baseball.
Murphy is the New York man who caught Barry Bonds home run 756 in San Francisco. I don’t think he actually caught it, he merely emerged from a pile with the ball. Nonetheless he has a ball that is predicted to fetch $500,000 in an online auction.
He claims he wanted to keep the ball instead of selling it. I’m not sure I believe him, but he’ll never be able to prove me wrong.
That’s because tax experts are saying he could be taxed on the perceived value of the ball, the same as if it is income. It’s unclear if that is true, but if I was Murphy, I wouldn’t challenge the assertion.
The concept is puzzling. The Internal Revenue Service declined to address the question in an article I read, so the issue remains muddied. There didn’t seem to be a good reason why the IRS wouldn’t answer the question, and there’s no obvious precedent as to why Murphy should be taxed on a leather baseball, evidently.
So Murphy is doing what he needs to do, since he’s too poor to pay taxes on a $10 baseball with a perceived value of $500,000.
There are practical reasons for selling it. If he keeps it, he’ll have to keep it in a safe deposit box. Keeping it on display in his home would only invite burglary or robbery, even if it could only be sold in an underground market.
And while the ball could appreciate in value, it could easily depreciate if Bonds’ legacy is further tarnished after he retires.
But how can the guy be taxed for catching a free baseball at a ballpark? Nobody knows what the ball is worth unless it is sold, it’s merely speculation.
If I inherit stocks or property from my grandfather, you can place a value on those things. If I inherit an original watercolor painting from my grandfather, who is not a known artist, could you argue I inherited a $500,000 painting? What if he leaves me a home run baseball he caught at a Minnesota Twins game in the 1960s, is that worth $100,000? Nobody knows. If there’s one person foolish enough to pay $100,000 for a Tony Oliva home run ball from 1965, is my tax liability based upon the desires of an over-zealous baseball fan, even though I have no interest in selling the ball?
Should I be taxed on the old comic books I bought during my youth? Some of them are worth more than what I paid for them, at least I hope so.
What if I bought a rare baseball card for pennies when I was a youngster and it could sell for $10,000 today in an online auction? Should I be paying taxes on the value of that card even though I haven’t proven it to be worth anything? What if I pee on the baseball card and diminish its value, am I no longer responsible for the tax liability?
I received a free set of Roger Clemens baseball cards during my lone visit to Yankee Stadium in 2003. They were as free as a home run baseball. Am I expected to pay taxes on that set if my set contains the lone solid gold card inserted randomly in a pack? (There wasn’t one, I’m exaggerating.) What if i don’t acknowledge publicly that I received the gold card?
What if Murphy never gave his name to the media on his way out of the ballpark, does the government hunt him down to identify who he is? (Television cameras would have made it easy to identify him, so in reality, he couldn’t have hidden his identity.) But what if he stuck the ball in his pants and acted like he had no idea where it was, and then quietly walked away at the end of the game, everyone none the wiser? Would the police launch an investigation to determine who walked away with an alleged $500,000 souvenir? No, probably not, but because this guy was publicly identified, he is now assumed to have a baseball worth $500,000.
What if Murphy pees on the Bonds baseball instead of offering it up for public auction, does he still have to pay taxes? And if so, is the ball worth more because of the statement he made by peeing on it? Who determines that?
If Murphy had the Bonds baseball appraised and insured, you could argue he had something of value. But unless it was assigned a value by a reputable third party, such as Lloyd’s of London, it seems to me that assigning a value to it and taxing Murphy is a bit un-American.
But then again so is allowing Bonds to hit his 756th home run as if he has never been guilty of wrongdoing.