360° Coverage : Manny Pacquiao's $20M Victory Over Bradley Is Big Win For...

2 Updates
Manny Pacquiao's $20M Victory Over Bradley Is Big Win For IRS Too
Photo Credit: Forbes Business

Manny Pacquiao's $20M Victory Over Bradley Is Big Win For IRS Too

Apr 13 2014, 3:32pm CDT | by

Manny Pacquiao’s Dominating Win Over Timothy Bradley earned him $20 million. That brings his career earnings above $300 million. But some of the money is clearly going to pay taxes in his long...

Filed under: news

 
 
 

27 weeks ago

Manny Pacquiao's $20M Victory Over Bradley Is Big Win For IRS Too

Apr 13 2014, 3:32pm CDT | by

Manny Pacquiao’s Dominating Win Over Timothy Bradley earned him $20 million. That brings his career earnings above $300 million. But some of the money is clearly going to pay taxes in his long brewing two-country tax flap. And given that this fight was in Las Vegas, the IRS has the upper hand.

Notably, Mr. Pacquiao is neither a U.S. resident nor a citizen. All of us on tax day know painfully well that Americans pay taxes on their worldwide income. But as a nonresident alien, Pacquiao doesn’t pay U.S. taxes on monies he earns elsewhere. Of course, Mr. Pacquiao’s big paydays and 14 fights were in the U.S.

Then, in early 2013, his adviser Michael Koncz sparked controversy by stating that Mr. Pacquiao would likely avoid fighting in the U.S. in the future. After all, our 39.6% rate is hard to swallow. All else being equal, fighting outside the U.S. in lower tax rate countries made sense. Yet return he did, and his $20 million guarantee for facing Timothy Bradley was a big win, in cash and otherwise.

Foreign athletes must file U.S. income tax returns and face special withholding rules so they don’t just pocket the money and run. They generally must pay U.S. income tax on their U.S.-source income. Earnings in Vegas? Clearly, that’s all taxed by the IRS.

But in other matters, what is considered U.S.-source can be debated. It includes pay for performances, endorsements, merchandise sales, and royalty or other income closely related to the event. And big money can turn on exactly how the “Hollywood Accounting” is done.

The IRS has a special program targeting foreign athletes and entertainers. Depending on an athlete’s home country, treaty benefits may apply. Yet disputes are common about how much income to allocate to particular countries and where endorsement earnings should be taxed. The U.S. Tax Court has often heard athlete tax disputes over promotional income, intellectual property and more.

Mr. Pacquiao’s taxes are controversial with the IRS and with the counterpart Philippines Bureau of Internal Revenue. The versatile boxer is also a lawmaker in the Philippines, yet tax authorities there long clamored for his U.S. tax records. Exactly what does he pay where, and how does he divvy it all up?

For a time, his promoter, Top Rank Inc., evidently submitted correspondence to the Philippines tax man showing that he did pay U.S. taxes via withholding. But the official IRS documents to confirm it were long debated. Some reports say that in all, he owes as much as $50 million. 

Pacquiao’s advisor, Mr. Michael Koncz, says Pacquiao’s financial situation in the Philippines may be more politics than anything. Mr. Koncz has said that tax deductions are at the center of the tax disputes. Mr. Pacquiao is famously charitable.

Pacquiao’s tax attorneys are said to be working on the case, and Mr. Koncz says it’s going well. But the IRS is famously sticky, and U.S. charitable contribution rules are rigid. Mr. Koncz has expressed concern over Mr. Pacquiao’s generosity with fellow Filipinos.

There are past liabilities for Philippine taxes and past liabilities to the IRS, once those are finally ironed out in court or otherwise. Clearly too, Mr. Pacquiao will owe current taxes to the IRS on his recent earnings. But the feisty boxer is already looking ahead. He noted after his Bradley fight that he thinks he can fight for two more years.

Perhaps he will face Juan Manuel Marquez or Mike Alvarado, who are scheduled to face off May 17th.  The IRS will be watching.

You can reach me at Wood@WoodLLP.com. This discussion is not intended as legal advice, and cannot be relied upon for any purpose without the services of a qualified professional.

 
Update
2

7 weeks ago

Khazanah throws MAS RM6b lifeline

Aug 29 2014 5:01pm CDT | Source: Business Times Singapore

August 30, 2014 1:15 AMKHAZANAH Nasional will inject RM6 billion (SS$2.4 billion) over three years to resuscitate loss-making Malaysia Airlines (MAS) under a recovery plan that includes even an Act of Parliament. Other key moves are migrating its operations, assets and liabilities to a new compan ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 
Update
1

7 weeks ago

MAS posts loss of RM307m for Q2

Aug 28 2014 5:00pm CDT | Source: Business Times Singapore

August 29, 2014 1:13 AMMALAYSIA Airlines (MAS) registered a loss of RM307 million (S$122 million) for the second quarter to end-June, but warned of worse to come in the second half when the "full financial impact of the double tragedies of MH370 and MH17 ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Spanish nurse cured of Ebola
Madrid, Oct 21 (Xinhua) Spanish nursing auxiliary Teresa Romero was pronounced cured of the Ebola virus disease according to World Health Organisation (WHO) guidelines after the results of a second test confirmed Tuesday that she no longer had the virus in her blood.
 
 
Clinical trials of Ebola vaccine start Nov 1 in Switzerland
Geneva, Oct 21 (IANS/EFE) The World Health Organisation (WHO) announced Tuesday that it will begin clinical trials Nov 1 in Switzerland of one of the two anti-Ebola vaccines currently under development.
 
 
Colombia to launch world's first floating gas liquefaction plant
Bogota, Oct 21 (IANS/EFE) The world's first floating gas liquefaction plant is due to begin operating next year off the coast of northern Colombia under a pact between Canada-based Pacific Rubiales Energy and Belgian shipbuilder Exmar.
 
 
Paralysed man walks again after pioneering cell therapy
London, Oct 21 (IANS/EFE) A paralysed man has been able to walk again after therapy that involved transplanting cells from his nasal cavity into his spinal cord, the BBC reported Tuesday.
 
 
 

Latest from the Network

Keira Knightley was 'a goody two-shoes'
Keira Knightley was ''a goody two-shoes'' when she was younger. The 29-year-old actress claims she was a ''boring'' well-behaved child and never skipped school because she didn't want to upset her parents or teachers....
Read more on Celebrity Balla
 
Kat Dennings is in love with Kim Kardashian
Kat Dennings thinks Kim Kardashian's butt is ''amazing.'' The '2 Broke Girls' actress was ''very nervous'' when the 'Keeping Up with the Kardashians' star filmed a cameo for the show's 80th episode and was too shy to...
Read more on Celebrity Balla
 
Taylor Swift doesn't 'need some guy' for inspiration
Taylor Swift is ''figuring out how to cope'' with life on her own. The 'Shake It Off' hitmaker hopes her upcoming album, '1989,' will prove she doesn't ''need some guy'' to help her ''make a great record'' or to feel...
Read more on Celebrity Balla
 
Sarah Hyland is 'great'
Sarah Hyland says she is ''great'' after obtaining a restraining order against her ex-boyfriend. The 'Modern Family' star is happy to be focusing on her career again after a judge recently granted her a three-year...
Read more on Celebrity Balla
 
India re-elected to UNHRC for two years
United Nations, Oct 21 (IANS) India was Tuesday re-elected to the United Nations Human Rights Council (UNHRC) for the term 2015-2017 in a keenly contested election in the UN General Assembly in New York. Other...
Read more on Politics Balla
 
Spanish nurse cured of Ebola
Madrid, Oct 21 (Xinhua) Spanish nursing auxiliary Teresa Romero was pronounced cured of the Ebola virus disease according to World Health Organisation (WHO) guidelines after the results of a second test confirmed...
Read more on Business Balla
 
Gurdwara closed in Belgium
Brussels, Oct 21 (IANS) The mayor of the town of Vilvoorde in Belgium, Hans Bonte, has ordered the closure of the local gurdwara, Guru Nanak Sahib, for one month. Belgian media Tuesday charged that the Sikh temple "...
Read more on Politics Balla
 
Air strikes kill 28 militants in Pakistan
Islamabad, Oct 21 (IANS) At least 28 militants were killed when the Pakistani army launched an air strike in the country's northwest tribal town of Datta Khel Tuesday, military said. In a statement, Inter Services...
Read more on Politics Balla
 
Report reveals large-scale torture in China's 'Black Jails'
Beijing, Oct 21 (IANS/EFE) The use of hotels and factories as clandestine prisons where thousands of people -- mostly women -- are tortured to prevent their complaints against the government from coming to light has...
Read more on Politics Balla
 
Clinical trials of Ebola vaccine start Nov 1 in Switzerland
Geneva, Oct 21 (IANS/EFE) The World Health Organisation (WHO) announced Tuesday that it will begin clinical trials Nov 1 in Switzerland of one of the two anti-Ebola vaccines currently under development. WHO Assistant...
Read more on Business Balla