Tax & Sports Update

Joseph B. Darby III

Some people have a “trophy husband.” Other people have a “trophy wife.” But only clients of Sullivan & Worcester LLP can have a TROPHY TAX ATTORNEY. Jay (the trophy in the middle) Darby is a tax partner in S&W’s Boston office who advises businesses and individuals on wealth creation and wealth preservation: How to make money, keep money, and pass money to the next generation at a minimum tax cost. Joseph B. “Jay” Darby III, Esq. Jay has over 30 years of practical tax experience, and, as the accompanying photograph should indicate, he embodies everything that a client could possibly look for in a sophisticated tax advisor: • Technical excellence • Creative thinking • Innovative solutions • Arm candy How the Tax and Sports Update Began Jay graduated with honors from Harvard Law School in 1978, and promptly did what any reasonable person in that situation would do: He became a sports writer! Over the years, he wrote sports columns for the Boston Herald, the Boston Phoenix, Hemispheres (the United Airlines in-flight magazine) and Worcester Magazine. For his efforts he was awarded First Place in the Sport Column category by the New England Press Association in 1989. After five years of full-time sports writing, Jay decided to get a “real” job as a tax attorney — and soon discovered that he loved to write about taxes as much as about sports. He now brings his sports-writing talents to the world of tax law, for the benefit and entertainment of our readers. Jay was honored as the “Tax Writer of the Year” in 2007, and again in 2011, by Practical International Tax Strategies, a division of Thomson Reuters. At the 2007 award ceremony, the Editor of Practical International Tax Strategies, Scott Studebaker, said: Our decision to award Jay Darby the “Tax Writer of the Year” award was both easy and difficult. Difficult, because we had many excellent articles from tax lawyers and other tax specialists to choose from. The easy part was because Jay’s articles are the ones that make us laugh.” In accepting the award, Jay deadpanned, “It is deeply gratifying to be identified as America’s leading — not to mention only — tax humorist.” Jay has finally found a way to combine his twin passions for tax and sports as the founding editor of the “Tax and Sports Update.” It is, unquestionably, the ONLY tax newsletter with an award-winning sports column! Jay has written literally hundreds of published tax articles, and is the author of Practical Guide to Mergers, Acquisitions, and Business Sales, a popular book on M&A structuring published by CCH. Jay uses the book in courses he teaches on M&A at the Boston University School of Law in the Graduate Tax (LLM) Program and at Bentley University in the Masters in Taxation (MST) Program. Link to Jay’s complete and PAINFULLY SERIOUS biography, including over 75 of his tax articles, at http://www.sandw.com/professionals-447.html.

Recent Posts

The Tall Tax Tale of Why Country Songwriters Get Capital Gain Treatment

Posted by Joseph B. Darby III on Aug 18, 2017 1:41:21 PM

As a tax lawyer, my professional life has the elements that my grandfather believed were essential to a really good job: indoor work, no heavy lifting.

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Topics: The Eisenhower Rule, Code Section 1221, tax break, capital gains

The Gift That Keeps on Giving - To the IRS

Posted by Joseph B. Darby III on Mar 17, 2017 7:48:35 AM

GettyImages-508893778.jpgA rather stunning near–catastrophe almost occurred in the art world recently, and only dumb luck – namely, a casual off-hand remark with a savvy tax adviser  saved the art owner from a huge, self-inflicted tax bill from the Internal Revenue Service. A non-U.S. taxpayer (meaning a non-resident alien in tax parlance) had an extremely valuable painting being displayed in a U.S. museum or gallery and, for a variety of reasons, he wanted to transfer the painting to his spouse, who is also a non-resident alien. Let’s assume for the sake of argument that the painting was worth $50 million. Because the gift was from a non-resident alien to his non-citizen spouse, and the property was tangible property located or situated within the United States at the time of the transfer, this transfer would have been subject to tax the U.S. gift tax regime, at a tax rate of up to 40%. WHAAAAATTTTT???!!!

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Topics: estate tax, IRS, Tax, transfer tax

How a Forfeited Real Estate Deposit Is Treated for Tax Purposes

Posted by Joseph B. Darby III on Jan 9, 2017 10:41:02 AM

Taxpayer signs a purchase and sale agreement to sell real estate to an unrelated buyer for $2,500,000. Buyer deposits 10% of the purchase price, or $250,000, as an earnest money deposit and as liquidated damages in the event the buyer fails to complete the purchase. The buyer subsequently fails to complete the acquisition, and the deposit is forfeited to the Taxpayer. The real estate in question was held as long-term capital property and not as inventory.

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Topics: Tax Law, real estate, escrow

Darn Those Sox!

Posted by Joseph B. Darby III on Jul 29, 2016 11:45:28 AM

The following is an audited and certified report on the Boston Red Sox covering that portion of the 2016 fiscal baseball year through today’s date.

The Red Sox are unquestionably better – miles and kilometers and even light-years better – than they were during the dismal years of 2014 and 2015, but the question that lingers, like a heavy scent of garlic, is whether this year’s pitching staff, which looks depressingly similar to last year’s pitching staff except at the very beginning (David Price), the middle (where else would you put Drew Pomeranz?) and at the very end (Craig Kimbrel), is really and truly enough improved to make this year’s iteration of the Olde Towne Team a real contender as opposed to a mere pretender. At the moment, the needle is leaning slightly on the pretender side of the cosmic scale, but there remains enough baseball left in this season that a contender could yet emerge from the erratic and distaff patterns that have thus far characterized the Red Sox season.

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Topics: Red Sox

Building the New Berlin Wall: Treasury's Anti-Inversion Regulations

Posted by Joseph B. Darby III on Jun 10, 2016 9:23:03 AM

The Treasury no doubt felt that it could chalk one up in the win column early in April 2016 when, following its release of a veritable carpet bombing of new regulations designed to blow up inversion transactions, the primary target, Pfizer Inc., chose to wave the white flag and cancel—at least for the time being—its efforts to merge with Allergan PLC. 

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Topics: IRS, Tax, Inversion Transactions, U.S. Treasury

Forms Over Substance: IRS Information Reporting Surges

Posted by Joseph B. Darby III on Feb 26, 2016 11:29:25 AM

Once upon a time, the United States federal income tax laws were largely about determining your federal taxable income and then calculating and paying the appropriate amount of income tax. How quaintly old-fashioned that era seems today. 

Increasingly, the IRS is interested in much more than just your income taxes (although you still need to pay your taxes, too). These days, the IRS is also busy chasing a wide range of information, which is required to be reported timely on a remarkable – and often redundant – array of IRS returns. Typically, these returns demand stunningly detailed information covering a broad array of business and personal activities and assets. 

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Topics: IRS, FBAR, Foreign Assets

Proposed Massachusetts Tax Changes: I'll Wait to See the Movie

Posted by Joseph B. Darby III on Feb 4, 2016 11:24:47 AM

Governor Charlie Baker wants to give the Massachusetts corporate income tax a makeover of Lady Gaga-like proportions:  Baker wants to extend the “single sales factor" apportionment regime, which currently applies only to manufacturers and mutual fund service corporations, so that it applies to all Massachusetts corporations. This would be a major boost to a variety of local companies, notably big retailers such as TJX and Staples.

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Topics: MA film credit, Tax, corporate income tax, state and local tax

Choosing the Right Business Vehicle: An Automotive Analogy

Posted by Joseph B. Darby III on Sep 16, 2015 9:05:00 AM

car.jpgWe live in the Era of the Limited Liability Company (LLC).

The LLC has become the dominant business vehicle of the early 21st Century:  It is the “must use” vehicle for all real estate transactions, and an increasingly popular choice for operating a commercial business as well.

How did this come to pass? The short answer is that the LLC is the most flexible business vehicle available. It is not the perfect choice for every situation, but it is the best choice for a majority of situations these days, and its use is likely to continue to burgeon for several reasons, all of which are most easily explained using automotive vehicular metaphors.

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Topics: Tax Law, S Corporation, LLC, Limited Partnership

Darn Those Sox: How to Fix the Holes in the Boston Lineup

Posted by Joseph B. Darby III on Jul 31, 2015 10:18:00 AM

RedSox.jpgThe Boston Red Sox are in a strange place these days – and I am not referring to last place in the America League East, which is a place they have occupied so consistently of late that it has practically become their postal mailing address.

No, I am referring to the fact that they have the 3rd highest payroll in baseball, and yet, quixotically, are a team animated and energized by very young players. During early July when the Red Sox actually played pretty decently (winning four straight series and compiling a 9–4 record) the first three hitters at the top of the lineup were Mookie Betts (age 22), Brock Holt (age 27), and Xander Bogearts(age 22); throw in catcher Blake Swihart (age 23), who was batting ninth during part of that winning streak, and the Red Sox were showcasing impressive and event breathtaking young talent exactly where you want it – up the middle, at catcher, second base, shortstop and centerfield.

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Topics: Sports

Divide and Conquer: The Latest Scoop on Code Section 355 Spinoffs

Posted by Joseph B. Darby III on Jul 10, 2015 11:01:00 AM

YAHOO.jpgYahoo has been much in the news of late – although Yahoo probably wishes that such were not the case. Yahoo’s stock plummeted and then mostly recovered in late May, as the result of some curious and perhaps even unguarded remarks by an IRS official at a Washington D.C. Bar Association event.

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Topics: EBIDTA, Tax Law, 355 Spinoff, 5% ruling standard

The only tax blog with an award-winning sports column!

The Tax & Sports Update provides timely updates and cutting-edge commentary on all issues affecting U.S. taxation, and, of course, an always humorous take on sports!

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