Donald Sterling Might Not Be Able to Write Off $2.5 Million Fine as a Business Expense

June 12, 2014

The California Senate Governance and Finance Committee yesterday passed a bill that would prohibit sports franchise owners from writing off fines imposed by the league as business expenses on their state income tax returns.

The law is fairly unapologetically aimed at Los Angeles Clippers owner Donald Sterling, who was fined $2.5 million by the NBA for making racially offensive comments that were uncovered in April. It would even be retroactively imposed to January 1, 2014, so Sterling’s fine would be captured.

From the Los Angeles Times:

The Senate Governance and Finance Committee advanced the bill, which applies to all sports franchise owners, but Chairwoman Lois Wolk (D-Davis) predicted that it would have trouble becoming law.

“It's really got an uphill battle,” Wolk said, adding that if the measure makes it to the desk of Gov. Jerry Brown, “I think it's going to be a hard one to get a signature on.”

[…]

Assemblyman Reginald Jones-Sawyer (D-Los Angeles) said he and Assemblyman Raul Bocanegra introduced the bill because they did not think state tax laws should reward owners of sports franchises for “behaving badly.”

Wolk voted for the bill even though she said she is concerned about singling out one private entity for a change in the tax law that has implications for free-speech rights.

Sterling is awful, and I’d love to stick it to him, but it’s a little bit weird to bring the tax code into play here. Fines imposed on franchise owners have been a mixed bag: check out this list at ESPN. Sometimes they are for totally reprehensible behavior, like when Cincinnati Red’s owner Marge Schott said nice things about Hitler, but other times they are for things that concern the league and its politics, like when Michael Jordan and Micky Arison were fined for just talking about the NBA lockout.

I suppose I’m a purist; let’s leave the league governance to the leagues, and the tax code to the legislature. Put another way, I believe in the separation of sports and state.

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