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Catch Historic Baseball, Pay Thousands!

by Ryan Guina

What? That’s right, sports fans (and fans of esoteric tax laws). The Associated Press reports that Mr. Matt Murphy, the lucky fan who caught Barry Bonds’ historic record breaking home run ball, will owe taxes on the estimated value of the baseball regardless of whether he sells or keeps the ball. Why? Because it is considered income

The situation: Murphy is a 21 year old college student, so he was likely in a very low tax bracket until he caught the ball. According to the tax official quoted by the Associated Press, catching the ball should put Murphy in the highest tax bracket for individual income, which is currently about 35%. It is estimated he will have to pay about $210,000 on the ball’s estimated $600,000 value.

Sell it or keep it? To top it off, he may not sell the ball! He is quoted as saying, “Part of me might want to sell it, but I really am leaning towards keeping it. It’s just too valuable, sentimental.” I’m not sure where a normal college student can come up with over $200,000 to pay the taxes he may owe in order to keep the ball, but if he can do it, more power to him!

What if the value of the ball changes? The AP also reports that if the ball increases in value (even perceived or estimated value), Murphy will owe capital gains taxes. Ouch! Conversely, if the value of the ball decreases, Murphy can file for losses.

Can the IRS do that? Honestly, I am not sure how they IRS can tax unrealized capital gains if the perceived value of the ball increases, nor do I know how they can accurately gauge the value of the baseball in order to tax it if he does not sell it.

One of a kind items of this nature generally sell at auction and there is no accurate method to guage how high or low the final selling price would be. He did not win a car or some other easily valued item on a game show. This is a one off item with no specific price tag attached.

Other options? Mr. Murphy has other possibilities as well – such as giving the ball to the Baseball Hall of Fame, donating it elsewhere, or giving it to Barry Bonds. If he donates the ball, does that mean he gets a $200,000 tax deduction?

What will happen? Obviously there are a lot of unanswered questions surrounding this situation. Similar questions arose when Mark McGwire broke the single season home run record in 1998. There have also been other historic home run balls with similar questions surrounding them. In almost every case, the person who caught the ball ended up selling it, which rendered all of these questions moot.

My guess is Murphy is enjoying his 15 minutes of fame and dragging this out as long as possible. And why shouldn’t he? The more the ball is talked about and the more press it gets, the more some wealthy collector is going to want to ad it to his personal collection. It sounds like a smart business move on Mr. Murphy’s end. It looks like they don’t teach everything in college! ;)

Another question: The ball has an estimated value of $500,00-600,000. How much is the home run record worth?


Published or updated February 7, 2009.
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{ 4 comments… read them below or add one }

1 Amber Yount

Hmm I heard Dace Ramsey say that all the rumors that he would have to pay taxes on it if he kept it were false. But he could be wrong. Said the IRS wouldn’t comment on it. Why should he pay taxes on it? It’s Baloney. I Understand if he should sell it (I still wouldn’t, I caught it, it’s mine…put it up on ebay? lol), but why should he owe taxes if he keeps it, if he keeps it I can hardly consider it “income”? (Can he trade the baseball for a house or hamburger?) Looks like the IRS is trying to get a free handout to me.

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2 Ryan

Hi Amber,

To be honest, it doesn’t make sense to me either, and I am not sure exactly what will happen with the situation. The information I wrote about was quoted from an AP article.

I hope Murphy doesn’t have to pay taxes on the ball until he sells it.

Another consideration for the IRS – MLB uses over 100 baseballs every game, and many are hit into the stands as foul balls or home runs. Each one of these balls has “value,” though that amount may be little. Does that mean every fan who gets a ball at a game needs to adjust their income up another $5 or so? The IRS would then either have thousands of extra line items to deal with, or there would be thousands of people breaking the law. In my opinion he shouldn’t be taxed until he sells the ball, which ultimately, I think he will.

This is a great conversation piece though!

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3 dimes

I seem to recall that when Mark McGwire was approaching his record back in 1998 or whenever that some IRS spokesperson specifically mentioned that the person who caught that ball would not have to pay gift taxes on it (like, if he’d handed it back to Mac), but otherwise its value should count as income, though it is hard to determine fair market value for a smacked baseball. Can you imagine though, gathering up the famous ball and handing it back to the player, and then getting chased down by the IRS for unpaid gift tax revenue? The things they think up!

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4 Ryan

Lucky for the guy that caught McGwire’s ball… he received a $3M pay day!

For all the speculation that surrounds this situation, I think he will end up selling the ball. It will be very hard to pass up a cool half million dollars! :)

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