Take me out to the ballgame,
Take me out to the crowd.
Buy me some peanuts and Crackerjacks,
But don’t hit me with another new tax!
That has to be the song 21-year-old Matt Murphy is singing, being the “lucky” guy who caught Barry Bonds’ ball—dubbed “Catch 756”— that beat Hank Aarons’ long-held home run record.
But the story doesn’t end with Mr. Murphy’s good fortune, because where there’s “fortune,” there’s the IRS.
You see, Mr. Murphy will likely have to pay taxes on that ball. The relevant questions—and the ones which don’t appear to have an immediate answer yet—is how much will he have to pay and when?
When Tim Forneris recovered Mark McGuire’s 62nd home run ball in 1998 that beat Roger Maris’ record for home runs in one season, he returned the ball. Then-IRS Commissioner Charles Rossotti said Mr. Forneris should be applauded for his action, not taxed.
When Phil Ozersky caught McGuire’s 70th home run later in the season, he sold it for $3 million. You can bet he got a tax bill for that!
Some think Mr. Murphy could be required to pay the taxes immediately, on an estimated value of about half a million dollars. Others think the IRS would likely hold off until the ball is sold, which makes the most sense. The IRS has been mum so far.
For one thing, the particular circumstances surrounding a Barry Bonds’ ball raise questions about the value. Mr. Bonds is a controversial figure, with lots of allegations that he used performance-enhancing drugs. The suspicions—whether accurate or not—have shaded his achievement, creating lots of indifference among people who might otherwise be singing his praises. That could lower the value of the ball. In addition, he will likely hit several more home runs, which could dilute the value of Catch 756.
As for our part, we think the ball does incur a tax obligation, but only when it’s sold. If Mr. Murphy decides to keep it, as he has recently indicated he might, there should be no tax obligation. And if he wants to donate the ball to some nonprofit organization—perhaps as a way of inaugurating the IPI Center for Unusual Tax Questions—it should be a charitable contribution.