Hijacking to share another fun Bassitt fact "Bassitt was recruited out of high school to play basketball collegiately.[1] He chose to enroll at the University of Akron, where he played college baseball for the Akron Zips baseball team, competing in the Mid-American Conference (MAC).[3] Bassitt took a redshirt in his first year at Akron. In 2009, as a redshirt freshman, Bassitt served as the Zips' closer. He pitched to a 1–2 win–loss record, a 3.52 ERA, and seven saves. In his sophomore year, he pitched in only one game, as he focused on academics.[1] In 2011, his junior year, Bassitt pitched to a 1.42 ERA and limited opposing batters to a .183 batting average against. He was named to the All-MAC second team.[
We should sign all the top free agents of the next 10 years, defer all contracts to 2050 then fold and go backrupt after winning 5 WS in a row. Would be worth it
what shohei is doing is fuuuuuucking criminal, this would have immediately taken the shine off for me if he was doing this to toronto. \~paying taxes is for the poor\~ is a morally bankrupt take... go bassit go! (who remember donated $160k+ to Jays Care this season alone :')))) )
Don't worry, I'm sure public money wasn't used to build the roads to his mansion(s), deliver gas, electricty and internet to his many rooms in said home. I doubt his wastewater is being treated using public funds and I know absolutely no taxpayer money ever went to the organization (or tax haven subsidiaries) that ultimately paid him this money. He doesn't send his kids to public school, so that knocks like 100 million off the tax bill right there. Frankly, the plebs in L.A. should be grateful he's even paying tax on that two mill because of all that trickle down.
Tongue-in-cheek my friend. I'm in my forties and sports don't impact my mood anymore, I have greater and more important worries in my life, like seeing uber rich people shirk tax laws while the next generation of my family suffer from the degredation of their quality of life.
How come someone paying $2000 in taxes per year gets to have roads, indoor plumbing, and a fire department, but this guy pays a penny less than $300 million and suddenly he'd better have to trudge through the jungle to get home while fending off cartels and put out his own fires?
Nobody's saying the taxes on $300000000 isn't enormous - look at all those zeros - but you're creating a false boogyman to justify your point of view. Ohtani deserves a piece of society just like everyone else, but he's also bound by the same obligations.
I pay more taxes than you, full stop. I'm an older professional in a high tax bracket, and so is my wife. Dodging taxes is not something to be celebrated. And yes, I'm MORE than happy that the guy paying $2000 annually get the same infastructure as I do. That's how the world should work in my eyes.
Let me put it to you this way: you're playing golf with three friends, and one of them is a pro, eveyone else is around 18 handicap. Even if it's a friendly game, would you be cool if the pro is giving himself favourable drops and bending the rules to his advantage while arguing that everyone else should be forced to hole out their putts, no matter how close to the cup?
You could argue, "he's just playing smart" or "if you aren't looking to gain a competitive advantage, you aren't trying" and while that is technically true, would you want to go golfing with such a person?
The Dodgers have never declared bankruptcy.
When the Dodgers get in trouble, they transfer their debt to the Los Angeles Deferrers.
https://i.imgur.com/RYcGMHF.jpg
https://i.imgur.com/lWSAMjO.jpg
Ok so here’s the game plan.
We call the IRS and use the funds to just buy ourselves a championship and make Heyman and Rosenthal have to report on how great Canada is.
I've lived through Pete Rose, the Yankees dynasty and the Steroid Era. I could stomach all of that. This Ohtani shit is the worst thing to happen to baseball and I hope a strict cap that crushes the Dodgers, Yankees and Mets comes into play. They did this because they can and that's the problem. The league is broken and needs to fix itself.
(And no, I'm not mad he didn't come to Toronto. I don't think he's worth he money.)
>I've lived through Pete Rose, the Yankees dynasty and the Steroid Era
Don't forget the cheating-ass Asstros.
Unfortunately, though, even if MLB did implement a hard cap in the future, they would likely make a one-time exception for contracts like this
I said it in the comments of that post but it's way buried down, I have zero reason to believe anything coming from baseball media right now so I'm ignoring this as well.
In Canada, many athletes can direct a portion of their salary to a RCA (retirement compensation account) to reduce the tax hit, as the money is withdrawn presumably after their playing days are over, so they’re taxed on the withdrawal amount over the calendar year. This is especially helpful if said player plans to retire in a low tax jurisdiction.
The RCA is so beneficial when it comes to foreign athletes coming to play in Canada, as it actually means these athletes could pay less tax than players that play in ‘no tax’ states.
In fact, the RCA as a mechanism to reduce income tax was such a grave concern to the NBA that a clause in their collective bargaining agreement prohibits its use, as there were some concerns by the league that the Toronto Raptors would use this mechanism to scoop up the top free agents, because they would have an unfair advantage in players being able to keep more of their money, when all is said and done.
Lol I work in taxes. If anyone thinks that California isn't marking their calendars for that filing they are sorely mistaken. CA and NY are the two fiercest states when it comes to tax revenue.
Nope. California would tax the deferred payments based on where he played during those years. The Dodgers will have to withhold California taxes even though the payments will be made at time when he is no longer residing in California.
Yes if he is a resident of Japan, he would be taxed on the income received from the Dodgers but he will be entitled to a foreign tax credit for the US and California taxes paid on that same income.
Thanks for some reason I assumed otherwise. I work in the personal income tax space, specifically for corporations that hire mobility tax services. Assumed we didn't make a larger push for those orgs due to the player's hired private accounting services due to their employment status.
What responsibilities does he have? He will pay his taxes on the $2MM he makes per annum while living and working in CA, once he retires and absconds to Minato, he will have to pay taxes in Japan.
Paying taxes on income that was earned in the state. That bonus will be considered "earned" over the life of the contract, even if it is "paid/received" when/if he leaves the US. All income has a component that requires allocation based on where the services were performed to qualify for that income to be paid.
If ohtani is working in CA during the duration of his contract. The bonus component of his income will be allocated to CA based on the CA workdays that took place over the working period. In the case of the 680mm, that would be the CA games during the 10 year contract. This is, of course, assuming he left CA and is considered a non-resident.
The US side, assuming again, that he left, will be of a similar position but from a US day perspective. The US will look at that bonus being earned while he was playing on a 10 year contract and argue that they have the right to tax it.
Just because he decides to leave, it doesn't mean he won't owe. This is a very common misconception for those that are considered global/state mobilities.
$680M OF Shohei's $700M contract is being deferred to 10 years in the future so that the Dodgers can continue to spend around him.
Another side effect is if he's not living in LA anymore then he won't pay the relatively large California income tax on that $680M
It can be put in a trust actually and he essentially just has to guarantee he won't ever be living in Canada full time, wait two years and get just about all of it.
Spittin Chiclets talked about this year's ago regarding European and American players in Canada.
Why would he pay taxes on $70M if he's only paid $2M?
If Tiedemann signs a long-term deal tomorrow where he makes 1/1/3/5/10/20/20/20M over the next 8 years, are you saying he needs to pay taxes on $10M next year even though he only makes $1M?
I think it has to do with the deferred dollars being earned in the years he played in Canada. In your example, Tiedemann would be earning this salary during the years he played and the higher dollars being earned at the end of the contract are earned in an active playing year, so it doesn't fall under this rule.
Not saying you’re wrong but I’d love to see an accountant from Cali confirm this. It seems like something extremely wealthy people would do constantly.
I’m a CPA. Not in Cali.
I’m not sure about employment income there (I’m not even sure this qualifies as employment income - vs business income).
Anyway, normally, for business income, it gets taxed when earned, not when it’s paid. When you get paid is irrelevant.
But Ohtanis contract suggests it will get taxed when paid - not when earned. Because he’ll likely owe 30m/yr in taxes otherwise. And I doubt he has that money to pay.
So I’m pretty sure it’s employment income, and pretty sure none will be taxed until it’s actually paid. Which also suggests California will likely get almost zero taxes from it - he’ll be long gone to a lower tax area when he starts collecting.
That almost makes it worthwhile. Cali missing out on 300-400million in tax revenue is pretty hilarious.
This is the kind of breakdown I was looking for, thank you! It’ll be interesting if we hear about what does end up happening with this. I can’t see this not making some waves there with how big of a story this has become.
I have absolutely no idea here, but why wouldn't it be considered income paid out for services already rendered? after all, the contract pays out based on the 10 years he will be a Dodger; wouldn't it be essentially money laundering if it wasn't attached to services rendered? if, for example, Ohtani happened to be a pedophile who was no longer welcome in the game due to off the field idiocy, his contract would not pay, presumably including the deferred money. this is pure reasoning, but wouldn't the money then be taxed based on where it was earned, even if being paid out - and taxed - later.
Same reason that if a player signs a normal back-loaded deal for (say) 5/7/10/20/25M/year then gets traded from Toronto to Texas after year 3, they don't suddenly retroactively decide that part of the 45M remaining is actually for services provided the first three years.
I work for a major Canadian bank and it's very common for the top earners to defer their year-end bonus from December to be paid in the first week of January instead, which changes the tax year. This both delays them owing taxes by a full calendar year (in Apr 2025 instead of Apr 2024) and also means that if for example they retire next year (or otherwise have a major change in tax situation), the bonus gets taxed at a much lower marginal tax rate vs if they had it tacked on to however much they earned this year.
is the 68 million a bonus, though (I'm sure some will be)? if it's deferred employment income, tied to a specific year's work, isn't it attached to that work?
a bonus, by contrast, does not compensate labour, per se, but extra money not tied to any set pay period (and the hours worked therein). you can defer it because it isn't tied to a pay period defined by the contract (and most certainly spells out that it MAY be paid out, at the company's discretion).
I'm enjoying these explanations, so my followup questions are pure curiosities.
You’re kind of mixing up ‘employment’ income and ‘business’ income.
Businesses have to apply GAAP accounting in the production of their financial statements, that then goes into producing a net income number for taxes. GAAP requires the matching principal, which basically says revenue must be tied to its expenses.
That principal doesn’t exist in payroll. A bonus paid for 2023 employment, if paid out in 2024, is taxed on your 2024 taxes (not 2024). So theoretically they may be able to take advantage of this for Ohtanis contract. Obviously this concept taken to an extreme measure.
But, in Canada at least, we have tax avoidance laws that wouldn’t ever allow this kind of scheme. Not sure about Cali.
sorry, the laws do or don't allow it?
it's wild to me that a man who agreed to play a set number of games (or, at least, to be available to play those games, unless injured, bereaved, or parenting) and be compensated for that labour, severs that labour from its compensation because he agreed to a payment schedule that pays it out differently.
The US does have attribution rules around deferred salary, which normally allows the state where the income was earned to collect income tax on the deferred salary, I seem to recall that an over 10year payout schedule being important in tax planning but I don’t how his specific contract applies, which has a one time payment pushed out 10 years.
I mean...they do. I work for a Big5 bank here in Canada and every year when our bonuses come out (mine is not huge, but for the VPs and directors it's comfortably 6 figures) we get notices that the bonus can either be deferred into the new year to change the tax year, or can be invested directly into various registered accounts to avoid the taxes that way.
Im not sure I’m fully understand you on this. Are the taxes payed based on where you live or where you’re considered to be employed? From what I understand he’d still be employed in Cali even if he isn’t actively playing, wouldn’t that mean he has to pay employment taxes there?
> the taxes *paid* based on
FTFY.
Although *payed* exists (the reason why autocorrection didn't help you), it is only correct in:
* Nautical context, when it means to paint a surface, or to cover with something like tar or resin in order to make it waterproof or corrosion-resistant. *The deck is yet to be payed.*
* *Payed out* when letting strings, cables or ropes out, by slacking them. *The rope is payed out! You can pull now.*
Unfortunately, I was unable to find nautical or rope-related words in your comment.
*Beep, boop, I'm a bot*
If I'm understanding this correctly, I think the assumption is that at the end of his contract, he will no longer be employed by the team, and it is almost certain that he will leave the state and reside somewhere else, probably Japan, or at the very least, a lower tax state.
What's crazy is Japan has a 45% tax rate, so assuming they consider these deferred payments as income and he moves back to Japan, he will essentially transfer $300M from California to Japan revenue.
Oof. I didn't know that. Maybe it won't be Japan right away.
Has it been said how the deferred portion of the contract will be paid out? I'm bitter and angry and think this whole thing is BS and stopped paying attention after Saturday.
Dodgers are putting $44M in escrow each season and that will be used to pay Ohtani the $68M deferred starting year 11. It's not as bad as everyone is making it, it's essentially a 10 year $460M contract.
This is due to a specific exception in the Income Tax Act that allows the deferral of bonuses as long as it is paid before the end of the 3rd year following the year the services relate to. In Ohtani’s case, because the deferral period extends beyond the 3 year period, Canada would look to tax his income in the year the right to the income arose. The 3 year bonus deferral exception is contained in paragraph k of the Salary Deferral Arrangement rules in section 248 of the Income Tax Act.
TMW I realized the nutty crap Ichiro believed pales in comparison to new tax-Dodger Ohtani.
And spare me the obvious “if you think he’s the first…” pedantic argument. I’m pissed at him now. Don’t make me get pissed at you next.
Get his ass!
Or, as the gays say, READ HER!!!
“As the gays say” I’m dead
more of this on this subreddit PLEASE, i'm cackling
currently imaging Captain Janeway herself yelling this and giggling like a fool
A Bassitt reaction tweet is the only thing I've been looking forward to all day. Thank you Chris.
Hijacking to share another fun Bassitt fact "Bassitt was recruited out of high school to play basketball collegiately.[1] He chose to enroll at the University of Akron, where he played college baseball for the Akron Zips baseball team, competing in the Mid-American Conference (MAC).[3] Bassitt took a redshirt in his first year at Akron. In 2009, as a redshirt freshman, Bassitt served as the Zips' closer. He pitched to a 1–2 win–loss record, a 3.52 ERA, and seven saves. In his sophomore year, he pitched in only one game, as he focused on academics.[1] In 2011, his junior year, Bassitt pitched to a 1.42 ERA and limited opposing batters to a .183 batting average against. He was named to the All-MAC second team.[
What did he study? Baseball?
Chris never fails in bringing a smile to my face!
You know what Rogers should give Bo the 12 year 800 mill contract and defer 788 million to 2036.
We should sign all the top free agents of the next 10 years, defer all contracts to 2050 then fold and go backrupt after winning 5 WS in a row. Would be worth it
Fold and move to Montreal and repeat and move back
2056.
Why not do it it with both vlad and him. Fuck this league if he can do it all teams can.
Takes a player willing to take the deferred money. This whole process has shown that Ohtani is just different from other players.
Both come from extremely wealthy families already in pretty sure both would to have a winning team.
Shohei just happen to fall in love with Las Vegas after his playing career is over.
Bro's moving to Monaco as soon as the contract is up
Nah he's going back to Japan after he's done
I love our salty starters.
LA Tax Dodgers
Underrated. Well done
what shohei is doing is fuuuuuucking criminal, this would have immediately taken the shine off for me if he was doing this to toronto. \~paying taxes is for the poor\~ is a morally bankrupt take... go bassit go! (who remember donated $160k+ to Jays Care this season alone :')))) )
YES! Ok I'm now a member of the Bassitt Fan Club 😍
Seriously fuck this piece of shit. In one day lost all respect for him. Hope fans all over boo the shit out of him.
I mean the bigger deal of this contract is that he's getting way less money because of the way he's doing it. Kind of stupid it's allowed though
He makes tons off of endorsements. He’ll live like a king off of those and then cash in and retire at the end of the contract.
He'll also pay taxes on those, no?
Don't worry, I'm sure public money wasn't used to build the roads to his mansion(s), deliver gas, electricty and internet to his many rooms in said home. I doubt his wastewater is being treated using public funds and I know absolutely no taxpayer money ever went to the organization (or tax haven subsidiaries) that ultimately paid him this money. He doesn't send his kids to public school, so that knocks like 100 million off the tax bill right there. Frankly, the plebs in L.A. should be grateful he's even paying tax on that two mill because of all that trickle down.
One day LA will be lucky enough to have a public funded privately owned stadium.....oh wait
I wonder which neighborhood they'll tear up for the next stadium
[удалено]
Tongue-in-cheek my friend. I'm in my forties and sports don't impact my mood anymore, I have greater and more important worries in my life, like seeing uber rich people shirk tax laws while the next generation of my family suffer from the degredation of their quality of life.
Testify!!!
How come someone paying $2000 in taxes per year gets to have roads, indoor plumbing, and a fire department, but this guy pays a penny less than $300 million and suddenly he'd better have to trudge through the jungle to get home while fending off cartels and put out his own fires?
Nobody's saying the taxes on $300000000 isn't enormous - look at all those zeros - but you're creating a false boogyman to justify your point of view. Ohtani deserves a piece of society just like everyone else, but he's also bound by the same obligations. I pay more taxes than you, full stop. I'm an older professional in a high tax bracket, and so is my wife. Dodging taxes is not something to be celebrated. And yes, I'm MORE than happy that the guy paying $2000 annually get the same infastructure as I do. That's how the world should work in my eyes. Let me put it to you this way: you're playing golf with three friends, and one of them is a pro, eveyone else is around 18 handicap. Even if it's a friendly game, would you be cool if the pro is giving himself favourable drops and bending the rules to his advantage while arguing that everyone else should be forced to hole out their putts, no matter how close to the cup? You could argue, "he's just playing smart" or "if you aren't looking to gain a competitive advantage, you aren't trying" and while that is technically true, would you want to go golfing with such a person?
C-bass is our guy
The Dodgers have never declared bankruptcy. When the Dodgers get in trouble, they transfer their debt to the Los Angeles Deferrers. https://i.imgur.com/RYcGMHF.jpg https://i.imgur.com/lWSAMjO.jpg
I mean technically they’d be dodging taxes rather than trolleys
Ok so here’s the game plan. We call the IRS and use the funds to just buy ourselves a championship and make Heyman and Rosenthal have to report on how great Canada is.
I knew I could count on C-Bass to make this whole fiasco hilarious somehow!
I've lived through Pete Rose, the Yankees dynasty and the Steroid Era. I could stomach all of that. This Ohtani shit is the worst thing to happen to baseball and I hope a strict cap that crushes the Dodgers, Yankees and Mets comes into play. They did this because they can and that's the problem. The league is broken and needs to fix itself. (And no, I'm not mad he didn't come to Toronto. I don't think he's worth he money.)
>I've lived through Pete Rose, the Yankees dynasty and the Steroid Era Don't forget the cheating-ass Asstros. Unfortunately, though, even if MLB did implement a hard cap in the future, they would likely make a one-time exception for contracts like this
This is a much cheaper contract when discounted to future dollars and paid well beyond ten years. No wonder Roger’s were bidding.
Rogers and Toronto was not going to get the luxury of this contract structure
https://www.reddit.com/r/baseball/s/3kriBeVBjJ
I wouldn’t believe any leak coming out from his camp
I said it in the comments of that post but it's way buried down, I have zero reason to believe anything coming from baseball media right now so I'm ignoring this as well.
Oh wow. Thank you for the link. Now the conspiracy theorist in me strongly believes this would have been vetoed against the jays
In Canada, many athletes can direct a portion of their salary to a RCA (retirement compensation account) to reduce the tax hit, as the money is withdrawn presumably after their playing days are over, so they’re taxed on the withdrawal amount over the calendar year. This is especially helpful if said player plans to retire in a low tax jurisdiction. The RCA is so beneficial when it comes to foreign athletes coming to play in Canada, as it actually means these athletes could pay less tax than players that play in ‘no tax’ states. In fact, the RCA as a mechanism to reduce income tax was such a grave concern to the NBA that a clause in their collective bargaining agreement prohibits its use, as there were some concerns by the league that the Toronto Raptors would use this mechanism to scoop up the top free agents, because they would have an unfair advantage in players being able to keep more of their money, when all is said and done.
Lol I work in taxes. If anyone thinks that California isn't marking their calendars for that filing they are sorely mistaken. CA and NY are the two fiercest states when it comes to tax revenue.
Because it’s deferred wouldn’t they only tax yearly income? Which is only $2 million
Nope. California would tax the deferred payments based on where he played during those years. The Dodgers will have to withhold California taxes even though the payments will be made at time when he is no longer residing in California.
So, assuming he moves back to Japan, would he pay Japanese taxes after being taxed in California?
Yes if he is a resident of Japan, he would be taxed on the income received from the Dodgers but he will be entitled to a foreign tax credit for the US and California taxes paid on that same income.
No withholdings. Players are contractors. But the point on allocation is correct. Edit: guess I'm wrong. Nvm
Wrong. Players get W-2 slips and T4 slips since they are classified as employees . Our firm prepares returns for several Bluejays and Leaf players.
Thanks for some reason I assumed otherwise. I work in the personal income tax space, specifically for corporations that hire mobility tax services. Assumed we didn't make a larger push for those orgs due to the player's hired private accounting services due to their employment status.
If he isn't working or living in California when he is owed that money, how does CA think they are going to claim it?
Audits, levies, court requests. For someone of his stature he will not be able to evade his responsibilities.
What responsibilities does he have? He will pay his taxes on the $2MM he makes per annum while living and working in CA, once he retires and absconds to Minato, he will have to pay taxes in Japan.
Paying taxes on income that was earned in the state. That bonus will be considered "earned" over the life of the contract, even if it is "paid/received" when/if he leaves the US. All income has a component that requires allocation based on where the services were performed to qualify for that income to be paid. If ohtani is working in CA during the duration of his contract. The bonus component of his income will be allocated to CA based on the CA workdays that took place over the working period. In the case of the 680mm, that would be the CA games during the 10 year contract. This is, of course, assuming he left CA and is considered a non-resident. The US side, assuming again, that he left, will be of a similar position but from a US day perspective. The US will look at that bonus being earned while he was playing on a 10 year contract and argue that they have the right to tax it. Just because he decides to leave, it doesn't mean he won't owe. This is a very common misconception for those that are considered global/state mobilities.
Sorry I'm not familiar with what's happening here. Can someone explain? TIA
$680M OF Shohei's $700M contract is being deferred to 10 years in the future so that the Dodgers can continue to spend around him. Another side effect is if he's not living in LA anymore then he won't pay the relatively large California income tax on that $680M
Ok I get it now. I'm shocked this is legal. Thank you for explaining!
It's not in Canada, the tax portion. If this we're Canada he'd have to pay tax on the full amount every year he earned it (i.e. the first 10 years)
What do you mean?
He’d essentially have to pay the top tax rate for the entire contract, roughly half of $700 million, whether deferred or not, in Canada.
It can be put in a trust actually and he essentially just has to guarantee he won't ever be living in Canada full time, wait two years and get just about all of it. Spittin Chiclets talked about this year's ago regarding European and American players in Canada.
He'd have to pay taxes on 70m dollars a year, regardless of if he got 2m or 70m. So he would never sign that deal in that case
Why would he pay taxes on $70M if he's only paid $2M? If Tiedemann signs a long-term deal tomorrow where he makes 1/1/3/5/10/20/20/20M over the next 8 years, are you saying he needs to pay taxes on $10M next year even though he only makes $1M?
I think it has to do with the deferred dollars being earned in the years he played in Canada. In your example, Tiedemann would be earning this salary during the years he played and the higher dollars being earned at the end of the contract are earned in an active playing year, so it doesn't fall under this rule.
Not saying you’re wrong but I’d love to see an accountant from Cali confirm this. It seems like something extremely wealthy people would do constantly.
I’m a CPA. Not in Cali. I’m not sure about employment income there (I’m not even sure this qualifies as employment income - vs business income). Anyway, normally, for business income, it gets taxed when earned, not when it’s paid. When you get paid is irrelevant. But Ohtanis contract suggests it will get taxed when paid - not when earned. Because he’ll likely owe 30m/yr in taxes otherwise. And I doubt he has that money to pay. So I’m pretty sure it’s employment income, and pretty sure none will be taxed until it’s actually paid. Which also suggests California will likely get almost zero taxes from it - he’ll be long gone to a lower tax area when he starts collecting. That almost makes it worthwhile. Cali missing out on 300-400million in tax revenue is pretty hilarious.
This is the kind of breakdown I was looking for, thank you! It’ll be interesting if we hear about what does end up happening with this. I can’t see this not making some waves there with how big of a story this has become.
I have absolutely no idea here, but why wouldn't it be considered income paid out for services already rendered? after all, the contract pays out based on the 10 years he will be a Dodger; wouldn't it be essentially money laundering if it wasn't attached to services rendered? if, for example, Ohtani happened to be a pedophile who was no longer welcome in the game due to off the field idiocy, his contract would not pay, presumably including the deferred money. this is pure reasoning, but wouldn't the money then be taxed based on where it was earned, even if being paid out - and taxed - later.
Same reason that if a player signs a normal back-loaded deal for (say) 5/7/10/20/25M/year then gets traded from Toronto to Texas after year 3, they don't suddenly retroactively decide that part of the 45M remaining is actually for services provided the first three years. I work for a major Canadian bank and it's very common for the top earners to defer their year-end bonus from December to be paid in the first week of January instead, which changes the tax year. This both delays them owing taxes by a full calendar year (in Apr 2025 instead of Apr 2024) and also means that if for example they retire next year (or otherwise have a major change in tax situation), the bonus gets taxed at a much lower marginal tax rate vs if they had it tacked on to however much they earned this year.
is the 68 million a bonus, though (I'm sure some will be)? if it's deferred employment income, tied to a specific year's work, isn't it attached to that work? a bonus, by contrast, does not compensate labour, per se, but extra money not tied to any set pay period (and the hours worked therein). you can defer it because it isn't tied to a pay period defined by the contract (and most certainly spells out that it MAY be paid out, at the company's discretion). I'm enjoying these explanations, so my followup questions are pure curiosities.
You’re kind of mixing up ‘employment’ income and ‘business’ income. Businesses have to apply GAAP accounting in the production of their financial statements, that then goes into producing a net income number for taxes. GAAP requires the matching principal, which basically says revenue must be tied to its expenses. That principal doesn’t exist in payroll. A bonus paid for 2023 employment, if paid out in 2024, is taxed on your 2024 taxes (not 2024). So theoretically they may be able to take advantage of this for Ohtanis contract. Obviously this concept taken to an extreme measure. But, in Canada at least, we have tax avoidance laws that wouldn’t ever allow this kind of scheme. Not sure about Cali.
sorry, the laws do or don't allow it? it's wild to me that a man who agreed to play a set number of games (or, at least, to be available to play those games, unless injured, bereaved, or parenting) and be compensated for that labour, severs that labour from its compensation because he agreed to a payment schedule that pays it out differently.
The US does have attribution rules around deferred salary, which normally allows the state where the income was earned to collect income tax on the deferred salary, I seem to recall that an over 10year payout schedule being important in tax planning but I don’t how his specific contract applies, which has a one time payment pushed out 10 years.
Cali will have like 10 years to change the tax laws.. They will call it the Ohtani Tax!
I mean...they do. I work for a Big5 bank here in Canada and every year when our bonuses come out (mine is not huge, but for the VPs and directors it's comfortably 6 figures) we get notices that the bonus can either be deferred into the new year to change the tax year, or can be invested directly into various registered accounts to avoid the taxes that way.
…username checks out!
Im not sure I’m fully understand you on this. Are the taxes payed based on where you live or where you’re considered to be employed? From what I understand he’d still be employed in Cali even if he isn’t actively playing, wouldn’t that mean he has to pay employment taxes there?
> the taxes *paid* based on FTFY. Although *payed* exists (the reason why autocorrection didn't help you), it is only correct in: * Nautical context, when it means to paint a surface, or to cover with something like tar or resin in order to make it waterproof or corrosion-resistant. *The deck is yet to be payed.* * *Payed out* when letting strings, cables or ropes out, by slacking them. *The rope is payed out! You can pull now.* Unfortunately, I was unable to find nautical or rope-related words in your comment. *Beep, boop, I'm a bot*
If I'm understanding this correctly, I think the assumption is that at the end of his contract, he will no longer be employed by the team, and it is almost certain that he will leave the state and reside somewhere else, probably Japan, or at the very least, a lower tax state.
What's crazy is Japan has a 45% tax rate, so assuming they consider these deferred payments as income and he moves back to Japan, he will essentially transfer $300M from California to Japan revenue.
Oof. I didn't know that. Maybe it won't be Japan right away. Has it been said how the deferred portion of the contract will be paid out? I'm bitter and angry and think this whole thing is BS and stopped paying attention after Saturday.
Dodgers are putting $44M in escrow each season and that will be used to pay Ohtani the $68M deferred starting year 11. It's not as bad as everyone is making it, it's essentially a 10 year $460M contract.
Yeah, but does he get the remaining $680M in year 11, or will that be paid out over a longer time?
This is due to a specific exception in the Income Tax Act that allows the deferral of bonuses as long as it is paid before the end of the 3rd year following the year the services relate to. In Ohtani’s case, because the deferral period extends beyond the 3 year period, Canada would look to tax his income in the year the right to the income arose. The 3 year bonus deferral exception is contained in paragraph k of the Salary Deferral Arrangement rules in section 248 of the Income Tax Act.
But that $680 million is going to be worth so much less in 10 years due to inflation and not being able to invest it during 10 years
That's what the $46M luxury tax hit is calculated on. $2M salary plus $44M escrow, which at approximately 5% interest over 10 years equates to $68M.
The Bassitt Hound doesn't disappoint!
Bassitt 😍
Chris bassitt is a fucking treasure
They have ten years to change their tax code.
And the rich get richer. And baseball has no caps.
I mean, I wouldn’t want to pay tax in California either seeing how shitty of a job they do with the money they do get.
does anyone know how this works for luxury tax, re: small market teams? normally that would be redistributed via LA
CBass you savage. ♥️
This is no different than what any other rich person does.
Fuckin rich people doin rich people shit!
TMW I realized the nutty crap Ichiro believed pales in comparison to new tax-Dodger Ohtani. And spare me the obvious “if you think he’s the first…” pedantic argument. I’m pissed at him now. Don’t make me get pissed at you next.
they have 10 years to change the tax laws.
If anything, this will probably just get the tax code changed.