Austin Lewis
Managing Editor

This tax season is in full swing, but tax professionals are already reviewing the recent tax reform changes to get ready for next year. And they aren't the only ones. As reported in Accounting Today,¹ Major League Baseball and other sports leagues are also affected by the Tax Cuts and Jobs Act.

We're all familiar with like-kind exchanges, usually involving the sale and purchase of real estate. In sports, trading one player for another was also considered a like-kind exchange, but under new tax law the trade could be viewed as swapping one business asset (player contract) for another. If player trades are no longer tax-free exchanges, teams would recognize a taxable gain or loss with each trade they make.

Without guidance from the IRS, it's too early to tell how teams will react, but early Fangraphs² analysis suggests that sports teams might be more inclined to sign free agents instead of making player-for-player trades.

Trades aren't the only thing affected by the TCJA, either. The best baseball players make millions of dollars per season, but they're still limited to a $10,000 state income tax deduction on the federal return just like the rest of us. And they can no longer deduct their union dues or agent commissions. The former is only about $80 per day, but the latter amounts to a much bigger hit (5% commission on a $300 million contract adds up quickly).

That said, swapping my tax deductions with theirs (including the income that comes with it, of course) is still a trade I'd want to make.

"The bachelor tax advocated Monday by Director of Finance Rolland Vandegrift as a new revenue source has brought in its first voluntary contribution — a $5 check — leaving the estimated state deficit totaling but $31,225,000. Leon Speiner, Willows hotel man, yesterday sent Vandegrift the check and a letter endorsing his suggestion that all California bachelors should be taxed between $5 and $25 a year until they reach the age of 80. ... Speier suggested the bachelor tax be extended to include married men under 60 years of age who are not fathers. This suggestion was apropos of Vandergrift's alarm because California's 1933 birthrate was the lowest in 25 years."
— The Associated Press, April 11, 1934.

Vandegrift was Governor James Rolph's finance director at the time he proposed the bachelor tax. He previously served as CalTax's founding director of research, then as CalTax president until his appointment to the Rolph administration. He later became California's first legislative auditor (a position now known as the legislative analyst). In the version of the AP story published in the San Bernardino Sun, the last name of the check-writer was spelled differently each time it was used (Speiner, Speirer and Speier).

Kathryn Zdan, EA
Editorial Director

The Governor's press office announced the appointment of a critical position within the administration — Deputy First Dog. You can see a picture at www.gov.ca.gov, and the Press Office released the information via tweet @GovPressOffice.

Cali Brown, 2 months, of Sacramento, has been appointed Deputy First Dog in the Office of Governor Edmund G. Brown Jr. Born on January 26, 2018 in Herald, California, to Standard Poodle mother Bailey and Border Collie father Murphy, Cali, a Bordoodle, is without a doubt the pick of her 13-puppy litter. Cali has spent the past two months learning the ropes from a family of ranch dogs and has already shown promise in her engagement with horses, donkeys, goats, sheep and chickens. As Deputy First Dog and the newest member of the Brown family, Cali will assist First Dog Colusa Brown in herding staff at the State Capitol and will lend a paw around the family ranch in Colusa County. She will begin intensive on-the-job training with the First Dog effective immediately. This position does not require Senate confirmation — though the Deputy First Dog will gladly appear almost anywhere there are treats — and the compensation is per diem belly rubs. Cali is a Doggocrat.

Note: First Dog Colusa Brown also has her own Twitter @ColusaBrown.