Caught a Home Run Ball? Add It to Your Tax Bill
With the 2022 Major League Baseball playoffs underway, expect to see plenty of fans carrying baseball gloves to the ballpark in the hope that they’ll catch a historic home run and cash in on the collectibles market. Just be careful what you wish for, sports fans, because that home run ball could land you a big tax bill.
See: 22 Side Gigs That Can Make You Richer Than a Full-Time Job
Find: 15 Worst States To Live on Just a Social Security Check
As Bloomberg reported, Judge’s 62nd home run ball has a potential value of up to $2 million in the sports collectibles market. The man who caught the ball was Cory Youmans, husband of “Bachelor Nation” alum Bri Amaranthus, People reported. As of Oct. 8, he still hadn’t decided what to do with it.
If Youmans decides to sell it on the collectibles market, the tax consequences could be substantial. Although IRS rules on rare, record-setting baseballs are fuzzy, anyone catching a potentially valuable baseball might be subject to the “treasure trove regulation.” Under this regulation, sudden financial windfalls must be immediately recognized as ordinary income.
For a $1 million baseball, the tax bill would come to just less than $333,000 for joint filers after the 37% top marginal rate is applied. When you add state income taxes to the mix, the final tax tally could reach as high as $433,000.
Even if a fan doesn’t keep the ball and decides to give it back to the player or team, the fan could still be on the hook for a gift tax obligation that might put them in the 40% top marginal rate. That doesn’t mean the IRS would enforce either of these regulations, but it’s always possible.
Bloomberg correspondent Michael Bologna said during an interview with NPR that a lot of tax professionals believe the treasure trove rule shouldn’t apply — that an individual who catches a game ball should only be taxed when the ball is sold. “That maybe seems like a fairer treatment. You know, you only have income when you sell the ball.”
Take Our Poll: Do You Think You Will Be Able To Retire at Age 65?
Discover: 8 Items Around Your Home That May Be Worth More Than You Think
Valuable baseballs held for more than a year would be taxed at the 28% long-term rate on collectibles. That means you’d pay at least $280,000 in federal taxes on a $1 million baseball. On the bright side, you’d still have $720,000 before state or other taxes apply — not a bad profit for a night at the ballpark.
More From GOBankingRates
- 10 Do's and Don'ts of Costco Shopping
- Explore GOBankingRates' 2023 Banking Resource Center
- The 10 Best Balance Transfer Credit Cards for 2023
- Experts: 4 Safest Places To Keep Your Savings
