When Barry Bonds closed in on the Hank Aaron home run record, a fun tax-law question arose: "If you're the lucky fan who catches the record-breaking home run ball, what are the tax consequences?"
Here are some choices:
1. The fan who catches the historic ball shouldn't owe tax until he or she sells it. This is the common sense view, though common sense doesn't always mix with tax law.
2. It is taxable income to the fan the instant that person catches the ball because it is an increase in wealth. This view stems from cases saying that someone who finds treasure owes tax on it right away.
What can you find on this dilemma? Write a memo to the file supported one and refuting the other of these possibilities.
Find the I.R.A section about this case, and do a small tax memo.