Under the One Big Beautiful Bill Act (OBBBA), sports team owners saw significant tax advantages, particularly through the permanent reinstatement of 100% bonus depreciation. This provision allows them to fully expense qualifying property, such as stadium improvements and equipment. President Trump floated the idea of restricting sports team owners’ losses, but the proposal was not included in the enacted version of the OBBBA. Sports team owners also sidestepped adverse proposed tax provisions that were passed by the House, but were dropped in the Senate. These proposals included narrowing the treatment of excess business loss carryforwards, trimming Pass-through Entity Tax (PTET) deductions, and halving intangible amortization for sports team assets.

Despite the rollback of the money IRS received under the Inflation Reduction Act of 2022, the tax agency continues its full-court press in enforcing the tax obligations of high-income individuals and complex partnerships. Of particular interest to IRS are sports-team partnerships that generate a substantial amount of tax losses. Below are common tax challenges and opportunities faced by sports-team partnerships and their owners. 

How Andersen Can Help

Andersen can coach you to adopt a successful game plan, including:

• Anticipating IRS challenges to losses and other deductions, and compiling records as well as adequate documentation of such transactions to counter such claims,
• Evaluating the overall tax posture of the team or its owners,
• Identifying and implementing additional tax planning opportunities, and preparing relevant federal and state tax returns for the team and its owners,
• Performing purchase price allocations, cost segregation studies, appraisals, or other valuation reports, and
• Preparing for a purchase, sale, or other transaction, including modeling the after-tax cash flows.

Download the PDF to learn more.