Steve Balmer stands to gain $1 billion in tax benefits from L.A. Clippers purchase

“Steve Ballmer stands to gain as much as $1bn in tax benefits as a result of his $2bn purchase of the Los Angeles Clippers basketball team, helping to explain why the Microsoft billionaire paid a record price for the club,” Arash Massoudi and Alan Livsey report for The Financial Times. “Mr Ballmer paid about four times the next highest price paid for a professional basketball team when he bought the National Basketball Association franchise in May. An FT analysis of US tax laws shows that Mr Ballmer could claim about half of the purchase price in current terms over the next 15 years against his taxable income. The credits can be claimed under a little-known feature of the tax code covering so-called active owners of sports franchises.”

“The exemption for sports teams was brought into law about a decade ago to resolve concerns over how media rights were accounted for, tax experts said. But they also create a powerful incentive for wealthy individuals to indulge in projects they are passionate about, in effect subsidised by the US government,” Massoudi and Livsey report. “Under an exception in US law, buyers of sports franchises can use an accounting treatment known as goodwill against their other taxable income. This feature is commonly used by tax specialists to structure deals for sports teams.”

“Goodwill is the difference between the purchase price of an asset and the actual cash and other fixed assets belonging to the team,” Massoudi and Livsey report. “In this case, Mr Ballmer can spread the goodwill over 15 years and reduce his tax liability on his other income by a certain amount for each of those years
Using a conservative model that assumes Mr Ballmer could account for $1.5bn in goodwill and a re-investment rate of 7 per cent, the potential tax credits equate to about $1bn in current terms.”

Read more in the full article here.

MacDailyNews Take: So, in effect, after 15 years, Monkey Boy will have only overpaid for the Clippers by a factor of two instead of four. He likes his strategy, he likes it a lot.

24 Comments

  1. Well to me this is ridiculous. Why should we give billionaires another tax break like this one. That’s part of what’s wrong with this Country. We keep giving stupid senseless tax breaks to the people who do not need it and not to the middle class. Totally ridiculous. If only people realized it was the middle class that made this Country great.

    1. Keeping the team in place will provide more jobs and income to the area than his break (given over a long period) will supply.

      I know I know. Liberals want everyone to be equally miserable, but people who have families to feed prefer jobs.

      1. It IS a stupid tax break. It’s a sports team. How about giving tax breaks for things like developing new sources of energy or cleaning up the environment. And what is this nonsense about keeping the team in place? has nothing to do with anything.

        Conservatives want everyone to live in a filthy world (see I can generalize too).

        1. Ireland. Do you understand how much Apple doesn’t pay in America? Surely a liberal will say that Apple is cheating by using Ireland? Right? Oh, sorry. Didn’t mean to use the word right.

        2. No, conservatards are felching child molesters. Why not fling baseless crap to the limit. Why pussy foot around with just lying about how liberals “feel”, all miserable and s**t. Let’s go all the way and highlight how stupid brain dead when your whole perception of the world is boiled down to such petty s**t..

      2. Take that liberal stupid s**t and put it where it belongs.

        It used to be considered criminal to over pay for something in this manner. What a perfect way to launder money. I buy Joe’s garbage collection service and pay him 300% more than it is worth and you somehow support this money laundering and the government rewards me for it?

        What the f**k has this world come to? What the hell kind of world is this where supposedly intelligent people defend this kind of s**t by stupidly trying to denigrate another group of people who are just as intelligent and well meaning as those people.

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