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Pandora’s Box Enters the Batter’s Box: How the Tax Cuts and Jobs Pandora’s Box Ent


At the time of passing the Tax Cuts and Jobs Act (TCJA), it was known that the limitation of itemized deductions would negatively impact athletes playing in high income tax states. However, after closer examination of the law, another potential impact on the sport industry became apparent. Previously, trades between sport teams did not trigger a taxable event, even if they technically met the criteria of being a 1031 exchange. The passage of TCJA ended the exemption and suddenly there were questions regarding the treatment of trades. Are the trades 1031 exchanges? If so, how should they be treated? How should the assets involved in the trades be valued? Smoker, Pogroszewski, Stich, and Arnold look at the unintended consequences of the TJCA.

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