Extra Innings · The Front Office
Depreciating the Roster
Selig v. United States (1984)
Charge: Federal income tax refund - IRS disallowed depreciation on player contracts bought with a franchise (suit against the United States)Court: U.S. Court of Appeals for the Seventh CircuitDocket: The Front Office
Could a franchise buyer allocate most of the purchase price to player contracts and depreciate them for tax purposes?
The facts
A group bought a bankrupt expansion club for about $10.8 million and moved it to a new city. They allocated about $10.2 million of the price to the players' contracts and wrote that cost off over the players' expected five-year careers. The IRS said the allocation was inflated and disallowed it. One of the owners paid the extra tax and sued for a refund.
You have the facts the court had. Guilty or not guilty? Call it in the game with your friends, then see what the court actually decided. Wrong call, you drink.
Citation: Selig v. United States, 740 F.2d 572 (7th Cir. 1984)
Read more at en.wikipedia.org. The source reveals the outcome.