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Chron: No free lunch, or basketball tickets, IRS says

Discussion in 'BBS Hangout' started by Rockets34Legend, Jan 24, 2005.

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  1. Rockets34Legend

    Rockets34Legend Member

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    http://www.chron.com/cs/CDA/ssistory.mpl/business/3004255

    By SCOTT SOSHNICK
    Bloomberg News

    Free tickets, one of the perks in professional sports, now come with a price in the National Basketball Association.

    On Jan. 1 the NBA began withholding income tax from its referees to account for the two complimentary tickets they get per game they work.

    Some of the league's 30 teams, including the New York Knicks, are withholding taxes on the tickets they give to their employees. The Houston Rockets are also complying, a spokesman said.

    Players say they are angry that about $10,000 will be withheld from their paychecks for what is supposed to be a fringe benefit.

    "It's bull," said Sacramento Kings forward Chris Webber.

    For Webber, who made about $16 million last season, the most that would have been withheld for free tickets would have been $13,815.90, based on the maximum income-tax rate of 35 percent and the average price of tickets as calculated by the Team Marketing Report.

    Responding to recent corporate scandals, the Internal Revenue Service is scrutinizing noncash compensation such as homes and cars or — in the case of professional athletes — extras like free tickets, said Elizabeth Buchbinder, a tax partner with Ernst & Young in Washington.

    "There's an increased IRS audit focus on executive compensation, and a big part of it is the noncash perk," Buchbinder said.

    IRS spokeswoman Nancy Mathis, citing privacy laws, wouldn't talk about the professional sports leagues.

    Giving free tickets to players is common among the major professional sports leagues.

    The average price last season of a premium NBA ticket, the type players typically get for free, was $152.93.

    Free tickets make up a percentage of a referee's compensation. Officials would get $25,080.52 in free tickets if they accept all that are available to them for games they work.

    Billy Hunter, executive director of the New York-based NBA players' union, said he would make the ticket tax an issue during negotiations to extend the labor agreement, which expires after this season.
     
    #1 Rockets34Legend, Jan 24, 2005
  2. JeeberD

    JeeberD Member

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    Not that the players can't afford it, but that's a bunch of garbage...
     
    #2 JeeberD, Jan 24, 2005
  3. F.D. Khan

    F.D. Khan Member

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    I don't think its garbage. If its part of someone's compensation why shouldn't they be taxed on it??

    I think its good that areas of corporate america are being cleaned up. Whether its any business, manipulating the system to not pay taxes on salary (whether cash or otherwise) is wrong.
     
    #3 F.D. Khan, Jan 24, 2005
  4. bejezuz

    bejezuz Member

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    I dunno. If I worked at a software company that gave me free cokes as a perk, and they witheld 10 cents a can out of my paycheck for those cokes, I'd be pretty ticked off. Now if players are scalping tickets, that's one thing. But if they're giving away the tickets and filling the stands, that sounds like a business expense to me, which should put it on the deductible side of the balance sheet.

    This is what we get for having such a screwy tax system.
     
    #4 bejezuz, Jan 24, 2005
  5. 4chuckie

    4chuckie Member

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    The IRS only taxes when it's relevant. They don't tax employees who receive a ham or turkey at the holidays, but they do tax if the employer wants to give you cash. But don't worry a c an of coke wouldn't be relevant.

    I never realized the players weren't being taxed on it (tickets). it definetely should be taxable.

    PS- For something to be deductible it has to show up as income at some point. You can't write off what you don't have or what doesn't have value.
     
    #5 4chuckie, Jan 24, 2005
  6. ROCKSS

    ROCKSS Member

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    Good. Its taxable compensation and should be treated as such
     
    #6 ROCKSS, Jan 24, 2005
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