Tuesday, May 06, 2014
Sterling Might Avoid $320 Million Tax Bill Because NBA Is Forcing Him To Sell Clippers
A decision by the NBA to ban the racist billionaire owner of the LA Clippers, Donald Sterling, from the league, and to take legal steps to force him to sell his team, could be a blessing in disguise. In a typical sale of the team, which is estimated to be worth at least $1 billion, Sterling could be subject to $320 million in capital gains tax. A special provision in federal law, however, could exempt the transaction from taxation. Tax experts tell the New York Post that Sterling could invoke Section 1033 of the Internal Revenue Code. That provision allows a special allowance for anyone who has "involuntarily converted assets." Taxpayers typically take advantage of the provision after losing their property to a natural disaster or to the government in an eminent domain proceeding. The only catch is that Sterling would have to reinvest the proceeds from the sale in a "like-kind" investment within two years, such as another sports team or entertainment venture.