[Anonymous]

Hi All,

I’m studying for REG and couldn’t help but to notice a real world scenario of involuntary conversion.

For those of you who don’t know, Donald Sterling, current owner of the Los Angeles Clippers, was caught on tape making racist remarks and the NBA has decided to take punitive measures by fining him $2.5 Million and forcing him to sell the team. The forced sale will likely be at a gain and ultimately my question boils down to ‘is it taxable?’

I’ve read arguments both for and against and I’m interested in your thoughts.

[lleon]

Doubt NBA eventually forces him to sell, but I imagine the market will force him to eventually. Pulled sponsorships, maybe some hit to ticket sales and also players & coaches not wanting to go there.

He's definitely bagging a gigantic gain though, bought in at about 12 million, Clippers could sell for 1bn if not more. Milwaukee Bucks just sold for 550mn I think, and they're atrocious, both on the court and in terms of where the franchise is located (not a big city like LA, NY, etc.) No offense to Milwaukee, I'm sure it's a great place 🙂

Licensed in Arizona

[Author]

Replies