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Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Wednesday, September 19, 2007

WSJ on Deductibility of Belichick's $500k Fine

The Wall Street Journal and its Law Blog have picked up on my prior posts (here and here) on the deductibility of the $500,000 fine levied against New England Patriots coach Bill Belichick for videtape spying in the Pats' opening game against the New York Jets:

Wall Street Journal (article by Peter Lattman & Amir Efrati):

The $500,000 fine levied last week by the National Football League on New England Patriots head coach Bill Belichick for his team's using videotape to try to steal signals from the New York Jets has shaken the sports world. Oddly enough, it has also roiled the tax-law world.

The TaxProf blog posed this question: Can Mr. Belichick deduct the fine?

A dozen law professors weighed in with a combined 10,000 words on the matter, including testy exchanges over arcane sections of the tax code. Most of them concluded the fine is deductible as a "trade or business expense."

"Because, unfortunately, in this day and age, it probably is 'ordinary' for coaches and players in professional sports to cheat and, if caught, to be fined by the league, the fine levied on the Patriots' coach can be viewed as an ordinary and necessary business expense," wrote Myron Grauer of Capital University Law School.

But how could cheating be considered a business expense?

Drawing a contrast perhaps only a lawyer could love, Mike McIntyre of Wayne State University in Detroit distinguished between cheating and violating rules. "[T]he fine was for violating a rule, not for cheating," he wrote. "The Patriots were not accused of cheating by the Commissioner and were not fined for cheating." He added: "No professional football game is played without someone breaking the rules."

Wall Street Journal's Law Blog (post by Amor Efrati).

http://taxprof.typepad.com/taxprof_blog/2007/09/wsj-on-deductib.html

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