P.D.B. Sports, Ltd., Bowlen Sports, Inc., Tax Matters Partner - Page 10

                                       - 10 -                                         
          sports enterprise" within the meaning of section 1056(a).  There            
          was little dispute by the parties about the transactional facts.            
          Upon the transfer of the partnership interest from Kaiser to                
          Bowlen, Bowlen I adjusted its basis in the player contracts to a            
          value of approximately $36 million in accordance with the                   
          mandatory basis adjustment rules of section 732(d), accompanying            
          regulations, and related statutes.7  Bowlen I adjusted its basis            
          in the player contracts without regard to whether Kaiser                    
          recognized gain from the player contracts.                                  
              Respondent determined that the partnership's basis in the              
          player contracts acquired with the Broncos franchise is limited             
          by section 1056(a), i.e., that the basis of the player contracts            
          is limited to the presale partnership basis in the player                   
          contracts ($6,510,555) plus any gain that Kaiser recognized on              
          the sale of his partnership interests allocable to the player               
          contracts.  Respondent's determination must be based on the                 
          inferential premise that section 1056(a) applies to the indirect            
          purchase and sale of a sports franchise held in partnership form.           
          As there is no evidence that Kaiser recognized gain from the                
          player contracts, respondent also maintains that the basis in the           

               7 It is noted that the $36 million basis for the player                
          contracts would have fallen within the sec. 1056(d) presumption             
          provision that no more than 50 percent of the total purchase                
          price of a sports team is to be allocable to player contracts.              
          If sec. 1056 applied here, the partnership would not have been              
          statutorily required to establish to respondent’s satisfaction              
          the portion of the basis allocation in excess of 50 percent to              
          respondent's satisfaction.                                                  




Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011