Last week, baseball phenom Shohei Ohtani became the first major league player to start the “50-50 club” by hitting 50 home runs and stealing 50 bases in a single season. With six games left in the season, he is likely to reach 55-55 and maybe even 60-60.
One lucky fan in Miami caught the 50th home run ball and walked away with it even though he had the opportunity to give it to the Dodgers. No one yet knows whether the lucky fan will keep the ball or sell it. It could be worth hundreds of thousands, or even more than a million dollars. With these numbers, the fan will need to see a tax professional because that ball could come with a huge tax bill.
The value of the ball will have to be reported as income for tax purposes. And if this results in a large tax bill, the fan might have to sell the ball to pay the taxes. Also, if the fan lives in California, he will have to pay California income taxes as well.
The IRS is likely to treat the ball as a “collectible,” meaning that it will be taxed at a flat 28% rate. The tax law doesn’t define what makes an item collectible but it lists certain items such as a work of art, a rug or antique, any metal or gem, any stamp or coin, or any alcoholic beverage. But the law allows the IRS to designate any tangible property as a collectible, so it could do that with Ohtani’s 50-50 home run ball.
But the real question is what the ball’s value is. A conservative value would be in the mid-six figures.
Historic home run balls have a precedent for selling for huge amounts of money. Mark McGwire’s 70th home run ball was purchased for $3.2 million. Aaron Judge’s 62nd home run ball sold at auction for $1.25 million although the owner reportedly turned down a $3 million offer.
But Barry Bonds’s 73rd home run ball sold for only $450,000, ($517,500 with commissions) in 2003. For lawyers, this is notable because two people who claimed to have caught the ball took the matter to court. The judge in the case considered arguments from older property cases including “precedent-setting fox hunting cases” (likely Pierson v. Post). The judge ultimately ordered the parties to sell the ball and split the proceeds.
On that note, it would be hard to estimate a value. The 50-50 accomplishment gained a lot of attention and baseball pundits believe that this accomplishment may not be repeated. Also, wealthy baseball fans in Japan may also want to purchase the ball, which could make bidding more competitive. But as of September 25, 2024, he has 53 home runs and 55 stolen bases. Would the subsequent home run balls dilute the value of the 50-50 ball, especially if Ohtani gets his 55th home run?
But there is a hard number. A report claiming that the Dodgers offered the fan $300,000 for the home run ball. While many online claimed that this number is a lowball, there is no other serious offer. So this could represent fair market value and this amount could be reported for income tax purposes.
The IRS has not issued guidance on how historic home run balls will be taxed. The closest guidance was issued through a nonbinding notice in 1998 where the agency explained the tax ramifications for home run balls caught and then immediately returned. It stated that the fan in these circumstances would not have taxable income or gift tax liability because it is equivalent to immediately declining the prize or returning unsolicited merchandise. The tax results may be different if the fan decided to sell the ball. The IRS commissioner said that sometimes the tax code can be as hard to understand as the infield fly rule and that the fan who gives back the home run ball deserves a round of applause and not a big tax bill.
The IRS might prefer to stay silent as unfair or confusing guidance on this issue can draw the ire of legislators, some of whom would love another reason to reduce the Internal Revenue Service’s funding. When confronted with the story of the fan facing tax bills after returning Mark McGwire’s home run ball, former Senate Finance Committee chairman Bill Roth (R‑Del.) complained that “the fact that there was ever even the possibility of Mark McGwire’s 62nd home run being taxed is a prime example of what’s wrong with our tax system.” Also, former House Minority Leader Dick Gephardt said that the IRS could turn a once in a lifetime catch into a once in a lifetime Catch-22.
The value of the 50-50 home run ball is uncertain until the end of the regular baseball season. But it might be large enough to warrant a significant tax bill for the lucky fan who caught it.
Steven Chung is a tax attorney in Los Angeles, California. He helps people with basic tax planning and resolve tax disputes. He is also sympathetic to people with large student loans. He can be reached via email at [email protected]. Or you can connect with him on Twitter (@stevenchung) and connect with him on LinkedIn.