Paul L. Caron
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Tuesday, July 3, 2018

LeBron James' Move To The Lakers Could Cost Him $21 Million In Extra State Income Taxes

Forbes, LeBron James' Move To Lakers Could Cost Him $21 Million In Extra State Income Taxes:

The $154 million question is: How much is the move to LA really costing James? As with any tax question, the answer is simple: It depends. On a lot of factors.

About the only fact we know is that his salary this season will be $35.7 million. The rest is fuzzy. Will he become a California resident? He owns a house out there, so it seems to make sense that he would be a resident after he signs his four-year deal. Not so fast — California has some of the most liberal residency laws in the country. Rather than focusing on days spent in the state, California focuses more on domicile and the temporary/permanent nature of one’s stay there. ...

Should he become a California tax resident, this move will cost him $5.2 million this year on salary and endorsement income, not to mention higher taxes on investment income. This would end up being over $21 million in additional state income taxes over the life of the contract.

The Hill, Nunes to LeBron: Brace yourself for California's Taxes

Nunes

https://taxprof.typepad.com/taxprof_blog/2018/07/lebron-james-move-to-the-lakers-could-cost-him-21-million-in-extra-state-income-taxes.html

Celebrity Tax Lore, Tax | Permalink

Comments

Taxes are the price of civilization. For taxes, we get value (or at least, we should). Forbes treats taxes instead as revenue foregone. What is James getting for his extra taxes (if he actually has to pay them)? He's getting California. Is California worth the extra money? I think so. He thinks so. Lots of folks think so. Oddly enough, Forbes seems to think that high taxes are worth the value as well -- it's located in New Jersey.

Posted by: Theodore Seto | Jul 3, 2018 12:35:48 PM

Congratulations, for once the tax lawyers didn't take their eyes off the ball when LeBron changed teams. Prior articles have frequently neglected to take account of nonresident income taxes due to states where athletes play (and in some cases, practice), taxes on investment income, and -- a huge issue for LeBron -- endorsements. This article gets all of the main points more or less correct.

Posted by: Matt | Jul 3, 2018 12:58:06 PM

Top athletes are often willing to reduce their immediate incomes by tens of millions of dollars in order to win a championship. Kevin Durant recently did so, twice. LeBron deserved a better team. Now he will have one.

Posted by: AMTbuff | Jul 3, 2018 6:58:47 PM

I think Mr. Seto is correct. Keep in mind LeBron will have more publicity opportunity in LA, which could lead to additional revenue and who knows, maybe even movies.

Posted by: anon | Jul 4, 2018 8:01:28 AM

@AMTbuff – LeBron isn’t in LA for a better team; he’s in LA for LA.

@anon – “maybe even *more* movies” (FIFY)

Posted by: Matt | Jul 5, 2018 1:38:02 PM

@AMTbuff – LeBron isn’t in LA for a better team; he’s in LA for LA.

@anon – “maybe even *more* movies” (FIFY)

Posted by: Matt | Jul 5, 2018 1:38:02 PM