The NBA and Disney Made a Deal. Now the Taxes!
The National Basketball Association (NBA) was the first sports league in the United States to shut down due to COVID-19 pandemic. The NBA and Commissioner Adam Silver decided that acting rapidly to keep players, employees, and fans safe was more important than the financial considerations of finishing the season even though most teams only had 15 regular season games to finish. Now that we have more understanding about the pandemic and a decrease in new COVID-19 cases, the NBA could be nearing its return to play and finish the 2019 – 2020 season. Various news sources are reporting that the majority of the league will reunite at Walt Disney World's Coranado Springs Resort to finish the season in Orlando, Florida.
The choice of Coranado Springs Resort is an inspired one because it allows for the NBA to keep all of its players, coaches and employees contained to one relatively manageable area. The ESPN World-Wide of Sports is a 220-acre athletic complex that has three arenas that can be configured into 20 basketball courts, allowing the NBA to play two games at once, and still have practice space at the same time. Players will likely arrive in Orlando for practice in the middle of July, and commence regular season-games at the end of July. The NBA finals may be in October. With greater clarity about the NBA season, players and coaches are certainly rejoicing that their compensation may not be affected materially. However, they will soon need to seek clarity about how this income will be taxed. Florida does not impose an income tax; as a result, players and coaches will not have any state withholding for the resumption of the games played at Orlando, Florida. However, a player’s state of residency may still tax income generated in Walt Disney World. The crucial question for many PMG Intrinsic clients is “Where are you a resident?” Often, a major determinant of an individual's status as a resident for income tax purposes is whether he is domiciled, or maintains an abode in the state and is “present" in the state for 183 days or more (one-half of the tax year). With the pandemic already scrambling traveling plans, and players possibly residing in Florida from July to October, a question of tax residency will likely arise in the 2020 tax year. For some of PMG Intrinsic’s clients, proper planning can save them up to 13.3% in state income taxes!
PMG Intrinsic is heartened that during the COVID-19 pandemic, the NBA equitably balanced the interests of the players, fans, employees and team owners. We need a return to normalcy, and seeing our favorite players on the court will be a rallying point for all of us. We at PMG Intrinsic also look to do our part and serve our clients and country.