Baseball is back, even as some teams are looking at early-season snow days. Little-leaguers across the land are donning gloves and getting ready to watch their favorite big-leaguers take to the field. Stats geeks are prepping spreadsheets to crunch numbers like WAR (Wins Above Replacement), BABIP (Batting Average on Balls in Play), and LWCT (Largest Wad of Chewing Tobacco). And the umpires at the IRS are watching a new pitch that Washington just threw across their plate, too.
Since 1921, code section 1031 has let you exchange property you’ve held for business or investment without paying tax on your gains. These “like-kind” exchanges usually involve real estate. They also include vehicles and equipment — if an up-and-coming CEO wants to swap his company’s tired old Gulfstream IV for a newer, shinier model V, that’s cool, too. The IRS has even ruled that “trades of player contracts owned by major league baseball clubs will be considered exchanges of like-kind property.”
But last year’s Tax Cuts and Jobs Act trimmed the roster on like-kind exchanges to real estate only. And that means some teams may already be behind in the count for taxes they owe on their trades!Continue reading →