The new U.S. tax law forces many sectors to "pay more in capital gains taxes" if they trade an asset for something more valuable, meaning sports franchises "could now face capital gains taxes every time they exchange or trade their highly paid players," according to Jim Tankersley of the N.Y. TIMES. By adding a "single word to the newly written tax code -- 'real' -- the law now allows only real estate swaps to qualify for that special treatment." The provision is "raising concerns and questions" across MLB and the NBA about the values of players. MLB Chief Legal Officer Dan Halem said, "There is no fair-market value of a baseball player. There isn’t. I don’t really know what our clubs are going to do to address the issue. We haven’t fully figured it out yet. This is a change we hope was inadvertent, and we’re going to lobby hard to get it corrected.” Tankersley notes the NBA is "similarly perplexed." It sent teams an email this month "detailing the disruption of the trading system under the new law, but told executives it was still figuring out how to respond." The leagues "face long odds to secure changes or clarifications," though it is unclear how aggressively the IRS "would enforce the provision with sports teams." Halem said that the league "was asking the Treasury Department for guidance on how to come up with valuations for tax purposes." Tankersley notes the Astros traded for P Justin Verlander last season for three prospects, and he was "clearly a more immediately valuable asset" than the prospects. Verlander "brought value to the Astros in a trade, and had the new law been in place last year, the team would have owed taxes on that added value." Tankersley: "But what, exactly, was that value?" (N.Y. TIMES, 3/20).
