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Fines vs. Suspensions

Updated: Oct 18, 2023

With a rash of suspensions and fines among NHL players this past month, we explore the tax consequences of these two forms of punishments

Over the past month, the NHL has taken several disciplinary actions against its players resulting in both suspensions and fines.  In late January, Boston Bruins Forward Brad Marchand was fined $10,000 for his trip on Detroit’s Niklas Kronwall.  Last week, the NHL suspended Detroit Red Wings Forward Gustav Nyquist for six games after he intentionally hit Minnesota Wild defenseman Jared Spurgeon with his stick on February 12th, while Anaheim Ducks forward Antoine Vermette was suspended for 10 games without pay on Thursday for slashing a linesman in apparent anger after a faceoff.

What are the tax consequences of fines and suspensions?

As professional hockey players, Brad Marchand, Gustav Nyquist and Antoine Vermette are popular employees in a multibillion dollar sports industry.  Because playing sports is their business, they entitled to certain tax deductions as a business expenses.  However, the types of tax deductible business expenses and the circumstances under which they are qualified as deductible are two issues the IRS has provided little guidance on for professional athletes.

My co-author Kari Smoker and I specifically address business expenses for professional athletes in our article “My Tax Accountant Says I can Deduct My Hot Tub. He’s the Expert—Should I Question Him?” which appeared in last springs’ edition of the Marquette Sports Law Review.  Using the guidelines provided within that article, I’ll review whether Marchand’s fines are deductible as a business-related expense and if so what benefit he would receive from these deductions.  In addition, we’ll compare those benefits to the tax consequences that Nyquist and Vermette face with their respective suspensions.

Fines: Ordinary and Necessary

The Internal Revenue Code under Sec. 162(a) entitles taxpayers to deduct trade or business expenses they pay or incur during the taxable year, so long as the expenses are “ordinary” and “necessary” in carrying out a trade or business. For professional athletes, playing professional sports is their business. They are thus entitled to deduct any expenses they incur that are “ordinary” and “necessary” in carrying out the business of playing professional sports.

If a professional athlete can establish, then, that an expense they paid or incurred during the tax year was related to the business of playing professional sports and that it is common, accepted, helpful and appropriate in that business, and that the amount is reasonable, they may be entitled to a trade or business deduction under Section 162.

Depending on the sport, professional athletes are paid to perform what some may consider violent acts—acts that at times break the rules of the league for which they play and are, thus, punishable by fines imposed by the league.  It could be argued that such fines are both ordinary and necessary expenses incurred in the performance of the player’s services and are, thus, deductible under section 162.

In Marchand’s case when a fine is determined to be a business expense – what are the practical advantages in deducting them?

Fines may not exceed $10,000 for a first offense and $15,000 for a second offense within a 12-month period.  Although Marchand will be able to claim the league fines as a tax deduction, all business-related expenses are claimed under job and other miscellaneous expense on an individual’s Schedule A and are subject to a 2% limitation.  In Marchand’s case with a current salary of $5 million, the 2% limitation would mean he could only deduct business related expenses that exceeded $100,000.  Since Marchand’s fines do not exceed this amount he would receive no direct tax benefit from being fined.

Not only do business related expenses need to exceed the 2% threshold, the individual’s income level also needs to be taken into consideration for all itemized deductions.  Since Marchand’s salary exceeds $155,650, another threshold for the ability to take deductions set by the IRS, his itemized deductions for state taxes paid, charitable contributions and business related expenses would be limited once again. This is the case for most professional athletes because average income levels are in the millions, making $10,000 fines almost irrelevant in the context of tax advantages.


Whereas fines are an expense, suspensions result in lost income.  In both Gustav Nyquist and Antoine Vermette’s situation, neither will be able to claim a deduction as the salary to be earned during the suspension will be forfeited.  Under the terms of the Collective Bargaining Agreement and based on his average annual salary, Nyquist will forfeit $158,333.34 for his six-game suspension and Vermette will forfeit $97,222.22 for his ten-game suspension.

Although Nyquist and Vermette will lose income, they will not need to pay federal tax on that lost income. More importantly they will not be subjected to any non-resident state tax or ‘jock tax’ for any road games for the period of the suspension.  Nyquist will have three road games including one which he will not be subject to Pennsylvania or Pittsburgh tax, while Vermette’s ten game suspension will include out of state games in Arizona, Chicago and St. Louis.


Even though fines are deductible they are limited; first, by the 2% limitation and then by the limit on itemized deduction due to their adjusted gross income.  As indicated, the end results are not as clear cut as some would think.  However, unlike suspensions, which do not limit the amount of forfeited income, fines are limited to $15,000 and with the deduction, players do receive some benefit by being able to expense them as a business-related deduction on their tax return.  Suspensions are calculated as a percentage of their average salary and a suspension of six to ten games can mean significant income lost, which cannot be recuperated even if that income will not be subjected to tax.


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