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  1.    #1  
    I was reading an article about the ball going to the Hall with an asterisk - don't really care, but help me understand this:

    "Matt Murphy, a 21-year-old student and construction supervisor from New York, emerged from a scuffle holding the ball. He said he decided to sell it because he couldn't afford to pay the taxes required to keep it."

    So, the govt wants money for a ball even if you don't sell it? How is the value determined? That is ridiculous.
  2. #2  
    Quote Originally Posted by bubbatex View Post
    I was reading an article about the ball going to the Hall with an asterisk - don't really care, but help me understand this:

    "Matt Murphy, a 21-year-old student and construction supervisor from New York, emerged from a scuffle holding the ball. He said he decided to sell it because he couldn't afford to pay the taxes required to keep it."

    So, the govt wants money for a ball even if you don't sell it? How is the value determined? That is ridiculous.
    It did not happen and the people who really know are not saying how they would have ruled... mute point... not even really a discussion.

    But an appraiser could determine value... people do this for a living.

    Far as him saying he could not afford the taxes.... he was stating he could not afford the potential taxes... the irs ruling could have went either way, officially.
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  3. #3  
    "MOOT" point, not "MUTE".

    Sorry, pet peeve...people using word they don't know.
  4. #4  
    if that was the same article I read, I liked the part where barry said he wouldn't show up for the ceremony if they put the in with the asterik. My thought? Great! Don't show up! I'm sure it will make a more enjoyable event for everyone else!
    Vinnie
  5. #5  
    Quote Originally Posted by bubbatex View Post
    I was reading an article about the ball going to the Hall with an asterisk - don't really care, but help me understand this:

    "Matt Murphy, a 21-year-old student and construction supervisor from New York, emerged from a scuffle holding the ball. He said he decided to sell it because he couldn't afford to pay the taxes required to keep it."

    So, the govt wants money for a ball even if you don't sell it? How is the value determined? That is ridiculous.
    Income is taxable whether it's in the form of money or material goods. The reason for this is that it would be possible to avoid taxes altogether by switching to a barter system if goods weren't taxable. For example, say your employer decides to pay you with baseballs instead of cash. The government can't allow you to reduce your taxes by simply changing the form of payment. (And if the rule were that you don't pay taxes on the baseballs until you sell them, then you could simply buy new things with the baseballs. We'd have a tax-free baseball economy.)

    The idea that you don't pay taxes on it until you sell it is based on the idea of unrealized capital gains - where you're not taxed when the value of something you already own goes up. But if you receive something of value, that rule doesn't apply.

    When you receive material goods, you're supposed to calculate the tax based on the fair market value. How that's determined is open to dispute if there isn't an open market for it.

    Whether the IRS will enforce its rules in this case is another matter.
  6. #6  
    Quote Originally Posted by samkim View Post
    Income is taxable whether it's in the form of money or material goods. The reason for this is that it would be possible to avoid taxes altogether by switching to a barter system if goods weren't taxable. For example, say your employer decides to pay you with baseballs instead of cash. The government can't allow you to reduce your taxes by simply changing the form of payment. (And if the rule were that you don't pay taxes on the baseballs until you sell them, then you could simply buy new things with the baseballs. We'd have a tax-free baseball economy.)

    The idea that you don't pay taxes on it until you sell it is based on the idea of unrealized capital gains - where you're not taxed when the value of something you already own goes up. But if you receive something of value, that rule doesn't apply.

    When you receive material goods, you're supposed to calculate the tax based on the fair market value. How that's determined is open to dispute if there isn't an open market for it.

    Whether the IRS will enforce its rules in this case is another matter.
    really well explained -- here and w/Buffett
    755P Sprint SERO (upgraded from unlocked GSM 650 on T-Mobile)
  7. #7  
    Quote Originally Posted by mikec View Post
    "MOOT" point, not "MUTE".

    Sorry, pet peeve...people using word they don't know.
    lol... some people should stay moot...
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  8. #8  
    Quote Originally Posted by theog View Post
    lol... some people should stay moot...
    "Better to remain silent and be thought a fool than speak and remove all doubt."
    ‎"Is that suck and salvage the Kevin Costner method?" - Chris Matthews on Hardball, July 6, 2010. Wonder if he's talking about his oil device or his movie career...
  9. #9  
    Quote Originally Posted by BARYE View Post
    really well explained -- here and w/Buffett
    Thank you.
  10. #10  
    Quote Originally Posted by Toby View Post
    "Better to remain silent and be thought a fool than speak and remove all doubt."
    The only two people with over 1000 posts don't have < < Edited by Septimus > > to contribute to the thread... figures....

    See Toby & mikec still a trollin....
    Last edited by Dieter Bohn; 11/05/2007 at 03:42 PM.
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  11. #11  
    Quote Originally Posted by theog View Post
    The only two people with over 1000 posts don't have sht to contribute to the thread... figures....
    Seemed a humourous amplification to your point, so I'm not sure how it's any more 'sht' than yours.
    See Toby & mikec still a trollin....
    "I do not think it means what you think it means."
    ‎"Is that suck and salvage the Kevin Costner method?" - Chris Matthews on Hardball, July 6, 2010. Wonder if he's talking about his oil device or his movie career...
  12. gojeda's Avatar
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    #12  
    The fact that Murphy claims that he could not afford the tax to keep the ball is a falsehood.

    There is not basis upon which to levy a tax against the baseball, whose worth was indeterminable (until it was sold, which incidentally, was sold for several times its guessimated worth). The IRS has absolutely no basis from which to levy a tax - and would not have done so.

    Now, if Mr. Murphy started showcasing the ball, say on a national tour where he charged $5 a head to see the ball - that is another thing altogether.
  13. gojeda's Avatar
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    #13  
    Quote Originally Posted by samkim View Post
    Income is taxable whether it's in the form of money or material goods. The reason for this is that it would be possible to avoid taxes altogether by switching to a barter system if goods weren't taxable. For example, say your employer decides to pay you with baseballs instead of cash. The government can't allow you to reduce your taxes by simply changing the form of payment. (And if the rule were that you don't pay taxes on the baseballs until you sell them, then you could simply buy new things with the baseballs. We'd have a tax-free baseball economy.)
    There is a problem with this analogy, and Ill tell you why.

    If the employer is paying you with baseballs instead of dollars, those baseballs are determined to have a value of some kind. For example, 1 baseball = 500 dollars. Or 1 baseball = 8 hours of work. This is intrinsic to a market based economy. Everything has to have a value affixed to it.

    Also, a barter system can be taxed like any other system. The reason why it is not taxed is because it is generally done "under the table". Taxes can be in the form of dollars, or taking a "portion of whatever is bartered" for government purposes.

    The effect is identical to a tax.

    Now the Bond's baseball has monetary value of some sort. But what that value is indeterminable because it is a one-of-a-kind item. The value can be as much or as little as you want it to be. However, until that ball is sold, or money is made OFF that baseball in a tangible way, there is simply no basis from which the IRS can levy taxes.

    Actually, the only value the ball had, before it was sold, was the cost to manufacture it - minus depreciation through use (if any).

    Indeed, Smith could have put the ball in a vault and be done with it.
    Last edited by gojeda; 11/03/2007 at 04:48 PM.
  14. #14  
    Quote Originally Posted by gojeda View Post
    Now the Bond's baseball has monetary value of some sort. But what that value is indeterminable because it is a one-of-a-kind item. The value can be as much or as little as you want it to be. However, until that ball is sold, or money is made OFF that baseball in a tangible way, there is simply no basis from which the IRS can levy taxes.
    As I said, how the value is determined is subject to dispute, but that doesn't change the fact that the baseball is taxable based on its fair market value. That value is what a willing and knowledgeable buyer would pay a willing and knowledgeable seller for the item. The IRS doesn't care whether the item was sold, or will ever be sold.

    The reason I brought up a barter system is that it's easy to imagine a trade of goods or services where no price has ever been placed on the items being traded. The law requires that the recipient determine a value and pay taxes based on that value.
  15. gojeda's Avatar
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    #15  
    Quote Originally Posted by samkim View Post
    As I said, how the value is determined is subject to dispute, but that doesn't change the fact that the baseball is taxable based on its fair market value.
    Which was undeterminable up until it was sold.

    That value is what a willing and knowledgeable buyer would pay a willing and knowledgeable seller for the item. The IRS doesn't care whether the item was sold, or will ever be sold.
    An item's "saleability" has nothing to do with taxes. Indeed, anything can be "sold"....at the right price.

    But determining what that price is does not happen until the item is sold or income is made off that item.

    The reason I brought up a barter system is that it's easy to imagine a trade of goods or services where no price has ever been placed on the items being traded. The law requires that the recipient determine a value and pay taxes based on that value.
    A price (value) is certainly determined in a barter system. The "price" may not be in the form of "dollars".

    Say we are both farmers. I offer you 10 cucumbers for 8 potatoes. The price for my 10 cucumbers has been determined to be 8 potatoes. Other farmers in the area now can use that equation as a gauge (or a baseline) for future transactions.

    Whether or not dollars and cents are involved has little to do with it. As a matter of fact, when one boils down really happens when someone buys a car, for example, is a really barter transaction. You trade money for a car. You trade money for a gallon of milk. You can also trade money and a car, for a much nicer car.

    etc...
  16. #16  
    Quote Originally Posted by gojeda View Post
    Now the Bond's baseball has monetary value of some sort. But what that value is indeterminable because it is a one-of-a-kind item. The value can be as much or as little as you want it to be. However, until that ball is sold, or money is made OFF that baseball in a tangible way, there is simply no basis from which the IRS can levy taxes.

    Actually, the only value the ball had, before it was sold, was the cost to manufacture it - minus depreciation through use (if any).

    Indeed, Smith could have put the ball in a vault and be done with it.
    Your answer makes sense, but it is simply not true. You could estimate the fair-market value of BB's baseball. There is nothing in the tax code that prohibits the irs to tax a baseball (Ref: BB's b). If you ask the IRS they will have no comment. If you ask lawyers and accounts, your answer will be 50% yes and 50% no (not exactly, but you get the picture).

    Sometimes you will arrive at the “wrong answer” if you attempt to use “common sense” to answer a tax question.
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  17. #17  
    Quote Originally Posted by gojeda View Post
    Which was undeterminable up until it was sold.
    As far as the IRS is concerned, it's determinable regardless of whether it's sold. Just get an appraiser to put a price on it. You may not like it, but that's the way our system works. You can't just throw you hands in the air and say, "I can't place a price on it." That's not an option.

    But determining what that price is does not happen until the item is sold or income is made off that item.
    The IRS and the tax courts say otherwise.

    The "price" may not be in the form of "dollars".
    That's my point. There may be no dollar price associated with the items, but you still have to pick a dollar price, and pay taxes based on it.
  18. gojeda's Avatar
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    #18  
    Quote Originally Posted by samkim View Post
    As far as the IRS is concerned, it's determinable regardless of whether it's sold. Just get an appraiser to put a price on it.
    An appraiser would have no idea what price to put on it, which is the point here. A "guess" doesn't cut it.

    You may not like it, but that's the way our system works. You can't just throw you hands in the air and say, "I can't place a price on it." That's not an option.
    Of course it is. There are many "treasures" in this country that are privately owned and not taxed, for example, private art collections.

    The IRS and the tax courts say otherwise.
    The tax courts would be the first to say that the ball's value cannot be determined.
  19. #19  
    Quote Originally Posted by gojeda View Post
    An appraiser would have no idea what price to put on it, which is the point here. A "guess" doesn't cut it.
    For tax purposes, yes, they can....

    Of course it is. There are many "treasures" in this country that are privately owned and not taxed, for example, private art collections.
    Not the same thing...

    The tax courts would be the first to say that the ball's value cannot be determined.
    No, they would not... although, you could argue the amount of the tax was too much...
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  20. #20  
    Quote Originally Posted by gojeda View Post
    An appraiser would have no idea what price to put on it, which is the point here. A "guess" doesn't cut it.
    Actually, appraisers make a living off of assigning prices to items which don't have a recent sale price. You may call it a guess, but it does "cut it" with the IRS.

    Of course it is. There are many "treasures" in this country that are privately owned and not taxed, for example, private art collections.
    It's quite simple. If you receive an item of value and choose not to pay taxes on it because you think there's no way to determine the value, you will lose in court to the IRS. Unrealized gains on "treasures" are irrelevant to the issue of income taxes.

    The tax courts would be the first to say that the ball's value cannot be determined.
    Very, very wrong.

    Courts define the fair market value as what a willing and knowledgeable buyer would pay a willing and knowledgeable seller for the item.
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