Taxation of the Sports Industry

As long as income is accrued through any kinds of transaction in the sports industry, taxation of the sports industry is what matters in the every corner of the sports. Sports player’s professional income and organization in the sports industry are supposed to be taxed as ordinary income by the federal government and by the state and city where the tax players reside. The business expense of being an sports player and organization, however, are deductible and reduce the income which will be taxed. The benefits of tax planning would appear to have a great impact on the taxpayers in the sports industry, but has not been widely used or speculated. It might be mainly about characterization of income, allocation and depreciation in the sports industry. Sports industry does not deal primarily with copyright as the case in the film or music industry. Nonetheless, the sports industry does stand on other intangible assets, namely the professional team sports franchise and the player contracts, which, like other intangible assets, are bought and sold, triggering the usual panoply of tax issues. Considering the fact that Congress, the courts, and IRS are incredibly in their favor of the industry, which may be attributable to the respect that team sports are accorded in culture of the nation, which could be coined as the "sports factor." This paper will cover the characterization of the income in sports industry, and tax planning, amortization, deductible income, deferred compensation, tax issue regarding franchise in the US sports industry.