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Lawmakers want to prevent Donald Sterling from deducting NBA’s $2.5 million fine from his taxes

May 8, 2014, 11:59 AM EDT

Donald Sterling Donald Sterling

The NBA calls its financial penalties “fines,” but they’re really forced charitable donations. They’re also, as Lamar Odom successfully argued to the IRS, business expenses.

You can bet Donald Sterling will try to write off his $2.5 million fine on his taxes.

On both the federal and state levels, lawmakers want to prevent that.

Kay Bell of Don’t Mess With Taxes:

Any deduction is just not right, say six House Democrats. So they’ve introduced the Stop Penalizing Taxpayers for Sports Owner Fouls Act of 2014.

The bill, which would apply to fines since Jan. 1, says:

In the case of an individual who owns (directly or indirectly) a professional sports franchise, no deduction shall be allowed under sub- section (a) for any fine or similar penalty paid to the professional sports league or association of which the franchise is a member.’’.

This would apply to Sterling – and was obviously proposed with him in mind.

As unsympathetic as Sterling is, I just don’t believe this law would be constitutional. If passed – which I suspect is unlikely to happen anyway – the courts could deem it ex post facto. In other words, the law punishes for acts committed before the law passed, usually a method not allowed in the United States.

Plus, I don’t like further complicating an already far-too-complicated tax code with a specific rule that singles out sports owners. Why should sports owners have their own tax code? What makes them different than the rest of us? (Yes, I’m against stadium subsidies, too. Don’t fix that problem by creating another.)

California lawmakers are proposing something similar. Phil Willon of the Los Angeles Times:

Two state Assembly members from Los Angeles filed legislation Tuesday that would prevent sports team owners from writing off league fines as a business expense when they file their state income tax returns.

The bill was filed by Democratic Assemblymen Raul Bocanegra of Pacoima and Reggie Jones-Sawyer of Los Angeles.

“Donald Sterling’s outrageous comments and historic fine should not be rewarded with a multimillion-dollar tax refund,” said Bocanegra, who chairs the Revenue and Taxation Committee. “This fine is intended as a punishment; it should not be used as a tax loophole.

The specifics of this bill are not clear, but I have the same concerns stated above.

At least one politician, though, might be on the right track – actually using the Sterling situation to do good. Willon:

Meanwhile, Rep. Brad Sherman (D-Sherman Oaks) has asked city, state and federal regulators to “prioritize” inquiries into any allegations that Sterling’s companies engaged in racial discrimination against people who sought to rent apartments at the billionaire’s residential properties.

In a letter to the regulators, Sherman cited a payment of more than $2.7 million that Sterling made in 2009 to settle federal claims that he discriminated against tenants. Sherman’s letter did not say there were allegations pending against Sterling or his companies.

If there aren’t new allegations against Sterling, it would be difficult to do much now after he’s settled, but yeah, the government should definitely be further investigating Sterling’s alleged housing discrimination. While they’re at it, apply that level of scrutiny to everyone – not just the headline-inducing Sterling – suspected of housing discrimination. That actually matters.

  1. RavenzGunnerz - May 8, 2014 at 12:04 PM

    Ok, I am all in punishing Sterling, but… keep politics out of it please…

    • therealhtj - May 8, 2014 at 2:50 PM

      You’d think lawmakers should have more important things to attend to.

      • asimonetti88 - May 8, 2014 at 6:59 PM

        Well, if they’re going to be doing something sports related, at least it’s involving taxes and not steroid inquiries.

  2. ocgunslinger - May 8, 2014 at 12:09 PM

    Politicians can’t contain themselves to jump on a bandwagon. Go fix the economy, foreign relations, immigration etc and THEN come back to how to punish people you don’t like…. or even better get off the ship now and get a real day job.

  3. nykfanwakemeupin2015 - May 8, 2014 at 12:27 PM

    In a sense they are trying to fix the economy as they want him to pay tax on that money vs writing it off as a business expense

  4. McFaddensPulledHammy - May 8, 2014 at 12:38 PM

    And the American Sheeple wonder why we ar 18T in debt with no jobs.

  5. hwatt - May 8, 2014 at 1:10 PM

    It should at LEAST be all fines for all inappropriate conduct in all businesses.

    That way it starts to make sense. As is, this has more to do with politicians trying to get re-elected than it does with common sense. And you better believe that any politician that tries to ignore it, or vote against it bc it’s too narrow will be labeled as a supporter of racism. So they probably view this as a slam dunk power play, as they continue to play with our tax dollars in all sorts of ways.

  6. azarkhan - May 8, 2014 at 2:05 PM

    Democrats are the absolute best when it comes to grabbing pitchforks, torches and inciting the mob. Meanwhile, California continues to go down the tubes with a 23% poverty rate and companies leaving because of the high tax rate and crazy regulations (the latest being Toyota).

  7. savvybynature - May 8, 2014 at 2:30 PM

    So, let’s give Sterling something else to sue over? Yeah that sounds productive.

  8. rcali - May 8, 2014 at 3:50 PM

    Um, when did we all of a sudden become China? Slowly but surely things are being taken away from us. Government continues to want more control. You see it happening to? Read the Patriot Act lately? Scarey stuff folks.

  9. seanb20124 - May 8, 2014 at 5:14 PM

    Gotta love retroactive laws. At least until they apply to you. Ex post Facto

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