On Tuesday, October 4th, Yankees’ outfielder, Aaron Judge sent home Run number 62 into the Dallas sky setting the new American League Record for a single season. The fan who caught the ball may have also caught a massive tax bill along with it. The record-setting baseball is estimated to be worth at least $2 million. The fan has not yet decided what to do with the ball but his decision could cause a major tax headache depending on what he chooses to do.
Tax Implications for Caught Baseballs
The rules set by the IRS when it comes to baseballs caught by fans can be extremely confusing. The IRS, which declined to comment on the situation, has never actually stated whether or not a baseball hit out of the stadium or sold by a fan becomes taxable. “In most cases, a fan who simply holds onto a home run ball from a record-setting game or player’s 600th home run (for example) typically won’t owe taxes as long as they hold onto the ball,” Kathy Pickering, told FOX Business.
If the fan decides he does want to sell the ball for $2 million, it will likely push him into the maximum 37% tax bracket. However, the actual amount of the tax would depend on a lot of factors like marital status, family size, income and deductions, as well as how long the fan holds onto the ball for. Holding the ball for over a year qualifies for a lower capital gains tax rate, as it would become a “collectible” and the IRS has a special tax rate on “collectibles” of this kind, reaching a maximum of 28% as opposed to the 37% maximum rate on capital gains.
What If They Just Give the Ball Back Or Donate to Charity?
In the unlikely event the fan decides to just hand the ball back to Judge and the Yankees, they likely will not face any tax implications. Although, if they do decide to give the ball back and ask for things in exchange, like jerseys, signed merchandise (balls, bats, etc.), or tickets, those items would be taxable, according to Pickering. If the fan decides to donate the ball to a charity or the Baseball Hall of Fame, the fan would be able to claim a deduction on his tax return for the following tax year.
Wrap Up
It is always an interesting story to see what happens when fans do get their hands on historic memorabilia like this because the chances of you catching that ball are, obviously, extremely low. It will be watched closely to see what the fan decides to do with the ball and if he will have a hefty tax bill coming his way.