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[quote MGS_forgot_password]You don't pay taxes on stock options until you exercise them, I don't see how this is any different.
The difference is that a stock option is worthless until you exercise it. It's just a piece of paper that says you CAN buy stock @ x price at some point which may or may not come. Once you exercise the option there is real money on the table and that is when the IRS comes a knockin'
The ball here is treated like income, as if the guy won it in a contest, because he has ownership of it and there is a true market value for it based on the offers he has already received and the estimates from auction houses. It's not an investment where the capital gain/loss is unknown b/c he hasn't sold it yet. He didn't buy for the ball; he caught it. It was free. When you get something for free the entire value of that item is considered income. If you won an iPod you'd have to pay taxes on the value of the iPod, even if you used the iPod and did not sell it. Same deal here.
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A local news story has said the the IRS *has* assigned a "fair market value" of $500.,000 and it's due and payable.
I suppose he could depreciate the value as time goes by and the value drops. What if the auction only gets $100,000 for it?
Either way, it seems really really wrong that he owes money based on the *estimated potential* value *if* sold. Let him sell it, then make him pay.
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[quote RAMd®d] What if the auction only gets $100,000 for it?
Either way, it seems really really wrong that he owes money based on the *estimated potential* value *if* sold. Let him sell it, then make him pay.
If it sells for less then he can file for a refund. As for the wrong or right of it, the IRS has to base it off of estimated value b/c if they wait until he sells it, well how do they know he didn't take it to China to sell and then deposit the proceeds in a Bahamian bank acct to avoid the tax. No, the IRS is going to nail people when its fresh in their mind and easy to get.
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So, you're saying the IRS should have agents rummaging through our homes looking for antiques and heirlooms that *might* be worth thousands of dollars someday? Should they tax my 9 year old niece's finger paintings because there's a remote possibility that she's the next Vermeer?
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Quote:Re: I don't get this re: Bonds 756 ball new
Posted by: RAMd®d (IP Logged)
Date: August 22, 2007 01:16PM
A local news story has said the the IRS *has* assigned a "fair market value" of $500.,000 and it's due and payable.
Either way, it seems really really wrong that he owes money based on the *estimated potential* value *if* sold. Let him sell it, then make him pay.
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Isn't this the very same principle used in assessing real estate? You buy a house for $100k and he following year they send you a tax bill based on their assessed value, say - $110K.
It's always seemed wrong as hell to me - but seems like the same logic being used.
home has accrued
Just sayin
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Don't bring you neice's finger paintings to "The PBS Antiques Road Show" and have them get a million dollar valuation on National TV while IRS agents are watching. :-)
Thousands of sports writers speculated the value of that ball long before it was caught.
General concensus what that ball was worth was stated during the game right after it was caught. No IRS agents had to leave their couch or get up from their stool at the sports bar to find out what it might be worth.
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[quote Seacrest]So, you're saying the IRS should have agents rummaging through our homes looking for antiques and heirlooms that *might* be worth thousands of dollars someday? Should they tax my 9 year old niece's finger paintings because there's a remote possibility that she's the next Vermeer?
1) I'm not saying the IRS should or should not do anything, just what they do. It's just the facts, which is what you asked for. Don't shoot the messenger, ya know.
2) You are confusing the issue. If you BUY something it's not a gift. What we are talking about here is a guy catches a historically important baseball that is worth $$$$ to collectors. It cost him $0. As the IRS views it, it was a gift, value received for no investment. It doesn't matter what the item is, a car, an iPod, movie tickets for life, if it has tangible value, and you receive it for free or below market value, that is income to you. Cha Ching. The IRS wants it's cut too.
Now lets get back to the family heirlooms. The IRS does get their share of those goodies as well. It's call the Death Tax. When someone dies the estate's executor has to inventory every spoon and dust mite in the home(s) and pay tax on the value of those items if the estate is worth more than a set amount, currently $2M, but that will go back down to $675K in 2011.
Again, I'm not saying this is right, just what current tax and IRS policy is. Tax policy is for a different thread and forum as you say.
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Property taxes are based on estimated values here in my state.
I bought my home for $230,000. The state now tells me it is worth $750,000, and my taxes are calculated on that amount.
Tax and spend! If you need more money, just raise taxes! It's a wonderfully magical way to fill the tax coffers.
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[quote Chupa Chupa][
2) You are confusing the issue. If you BUY something it's not a gift. What we are talking about here is a guy catches a historically important baseball that is worth $$$$ to collectors. It cost him $0.
Ah but he did "buy" something, a ticket for the game, where as noted earlier in this thread it has been the longstanding policy that any ball that goes into the stands may be kept as a "souvenir" just like any other that is available for sale in the park.
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1) I'm not saying the IRS should or should not do anything, just what they do. It's just the facts, which is what you asked for. Don't shoot the messenger, ya know.
Fair enough.
2) You are confusing the issue. If you BUY something it's not a gift. What we are talking about here is a guy catches a historically important baseball that is worth $$$$ to collectors. It cost him $0. As the IRS views it, it was a gift, value received for no investment. It doesn't matter what the item is, a car, an iPod, movie tickets for life, if it has tangible value, and you receive it for free or below market value, that is income to you. Cha Ching. The IRS wants it's cut too.
The ball he caught has a retail value of $12.99.
If the IRS wants to collect $3.00 of that, I'm Ok with it.
The value to him to keep the ball on his mantle is sentimental.
ONLY if he sells the ball does he realize the theoretical $500,000+. At that point, IMO, he should pay capital gains tax on the difference between $12.99 and what he sold it for.
Now lets get back to the family heirlooms. The IRS does get their share of those goodies as well. It's call the Death Tax. When someone dies the estate's executor has to inventory every spoon and dust mite in the home(s) and pay tax on the value of those items if the estate is worth more than a set amount, currently $2M, but that will go back down to $675K in 2011.
When the IRS starts collecting the Death Tax while I'm still alive, then I'll worry.
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