Pay to Play? How States Handle Signing Bonuses for Athletes

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Non-CPA sports fans (and athletes themselves) increasingly appreciate the tax aspects of luring the best free agent athletes to their teams.

One recent example is the whopper of a contract that agent Scott Boras cooked up for his client, Washington Nationals pitcher Max Scherzer. Everyone — not just the tax guys and taxpayer—could appreciate the millions in tax savings that Scherzer received by signing with the Nationals over, say, the New York Yankees, the Los Angeles Angels of Anaheim, or his former employer, theDetroitTigers. Scherzer, a Florida resident when he signed with the Nationals, agreed to a seven-year deal worth $210 million, including a $50 million signing bonus paid over numerous years.

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