Clippers Ex-Owner Donald Sterling Owes $662M in Tax
80 year old Donald Sterling owned the NBA Clippers for around 33 years. This makes him the most tenured owner in the history of the NBA. However, things have only been downhill for this veteran owner recently. First, the NBA decided to initiate a charge that terminated his ownership. They put forward a list of Sterling’s actions that “damaged and continue to damage the NBA and its teams”. These actions include disparaging minorities and African-Americans. In fact, Sterling was charged with telling a female friend not to “associate publicly with African-Americans” and not to bring them to Clippers games!
Diagnosis Follows
As Sterling’s family got ready to sell the Clippers, they were hit with another blow. Sterling, at the ripe old age of 80 years, has been diagnosed with Alzheimer’s. This led to him being side-lined due to diminished mental capacity when the deal for the Clippers team went down. The Los Angeles Clippers NBA franchise has now been successfully sold to ex-Microsoft chief executive Steve Ballmer for a massive $2 billion. However, Sterling’s woes are not yet over. The most vicious three letter word “TAX” is now dangling over his head like Damocles’ sword!
After having purchased the Clippers for a meager $12.5 million in 1981, Sterling has made a huge profit in this deal which is being hailed the “highest price ever paid for an NBA team”. While others picture Sterling enjoying the money he has raked in, tax officials have woken up to the deal. Preliminary inquiries indicate that Sterling owes the State of California a whopping $662 million in tax!
What is California going to do with this? More money for high school drop outs in the form of welfare? More money for the corrupt teacher’s union which is a large reason many students graduate from California high schools and cannot read? California is clueless.
Tax Break
However, Sterling’s lawyers have not given up as yet. There is a chance that he will be able to claim a tax break under the Section 1033 of the U.S. tax code. Under this section, Sterling can contest that he deserves a special concession or tax break because his assets were “involuntarily converted” owing to pressure from the NBA. How much does this save him? If played right by his lawyers, he could save a cool $320 million as a tax break!
Meanwhile, his team of lawyers have also been busy stirring up other storms with the NBA. Latest reports suggest that they will be suing the NBA and seeking a humongous $1 billion in damages! The charges they intend to bring against the NBA include “invasion of Sterling’s constitutional rights, violation of anti-trust laws and breach of fiduciary duty associated with the NBA’s lifetime ban and termination charges.”
As it Stands
Owing to his medical condition, the person at the helm today is none other than Shelly Sterling who is acting as the sole trustee of the family’s trust. Shelly is the one who authorized the sale of the Clippers to Ballmer and it is her signature gracing the dotted line on the $2 billion agreement made with Steve Ballmer.
All in all, with the successful sale of the Clippers and impending lawsuit against the NBA, it looks like Sterling will have enough change left over to fork out the tax amount to the State of California. The tax break will only sweeten the deal for him.
In fact, California, which is billions of dollars in debt and losing jobs left and right to lower tax states, should have Sterling run lead the state and depose of Jerry Brown who only crushes jobs while Sterling has created them throughout his life. But Sterling would have to check his words and opinions in some cases though.
