These teaching notes present suggested solutions and discussion points for the questions presented in the case.
Trades of players between professional sports teams have the potential to be treated differently after the passage of the TCJA. Prior to the TCJA, a trade between two professional sports teams was classified as a like-kind exchange under IRC §1031. This was further supported by Revenue Ruling 67-380 (1967), which stated that “trades of player contracts owned by major league baseball clubs will be considered exchanges of like-kind property within the purview of IRC §1031(a) of the Code. Gain will be recognized on such exchanges only to the extent that ‘boot,' as described in IRC §1031(b) is received.” Although this Revenue Ruling dealt with baseball teams' contracts, it is presumed that professional basketball contracts would have received the same tax treatment under the Code.
Under the revised IRC §1031 statute, post-TJCA, nonrecognition in a...
