Paul L. Caron

Friday, June 4, 2010

IRS Is Big Winner in Shift of Phillies-Jays Series from Toronto to Philadelphia

Major League Baseball's decision to move the June 25-27 Blue Jays-Phillies series from Toronto to Philadelphia to avoid the G-20 summit being held in Toronto will cost Phillies ace Roy Halladay, who picthed for the Blue Jays for 12 seasons, $75,000 in additional federal income tax.  From the Wall Street Journal:

The potential tax hit is related to excess foreign tax credits Mr. Halladay accumulated when he played in Canada and now won't be able to use this year, according to Robert Raiola, an accountant at Van Duyne, Behrens & Co. ...  American athletes who play for Canadian teams are taxed on earnings at combined federal and provincial rates of about 40%, Mr. Raiola said. They also owe U.S. tax of 35% on those earnings but can use foreign tax credits to reduce that tax. If the athlete is subsequently acquired by a U.S. team, he can lower his U.S. tax burden by using some of the excess foreign tax credits—but only for games played on foreign soil. Mr. Halladay will earn $15.75 million this year from the Phillies. About $215,000 of that would have been allocated as foreign-source income from the Toronto games—whether or not Mr. Halladay pitched any of the games—generating what would have been a tax savings of about $75,000, Mr. Raiola said.

Celebrity Tax Lore, Tax | Permalink

TrackBack URL for this entry:

Listed below are links to weblogs that reference IRS Is Big Winner in Shift of Phillies-Jays Series from Toronto to Philadelphia: