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recognized by Kaiser may have been contained in Kaiser's 1984
Federal income tax return. The Internal Revenue Service
destroyed Kaiser's return as part of its normal practices and
procedures for destruction of old tax returns. Kaiser, a
Canadian national, did not testify at trial.
OPINION
I. Background
As part of the Tax Reform Act of 1976, Pub. L. 94-455, 90
Stat. 1520, legislation was enacted to address certain tax
aspects of transactions involving professional sports franchises.
One major aspect concerned the amortization of the costs of
player contracts. Laird v. United States, 556 F.2d 1224 (5th
Cir. 1977); First Northwest Indus. v. Commissioner, 70 T.C. 817
(1978), revd. and remanded on other grounds 649 F.2d 707 (9th
Cir. 1981). Section 1245(a)(4) was enacted to require
depreciation recapture regarding player contracts when a sports
team is sold irrespective of whether the contracts are actually
resold.6 Concerning the issues in this case, legislation was
enacted to prevent a sports team purchaser from allocating more
than a fair market value portion of the purchase price to player
contracts.
6 Player contracts are sec. 1231 property. Generally, the
sale or exchange of player contracts results in capital gain
treatment for the seller's income, subject to the aggregation
requirements of sec. 1231.
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