Saturday, August 11, 2007

Sell! Sell now!

It's definitely time to sell. No, not your stocks. Invest for the long haul.

It's time for Matt Murphy, the young New Yorker who caught Barry Bonds record-setting home run ball, to unload the thing.

While most sports memorabilia appreciates with age, we don't see any upside to hanging onto this used Spalding, only downside. Barry's image will likely become even more tarnished as the steroids scandal continues to unfold. Then there could be surprises that come out of left field. Perhaps it's revealed that Bonds has been spending the off season at Michael Vicks's little dog park. Or maybe he's been betting on basketball games with Tim Donaghy. Any revelations like those would devastate the value of the ball and Murphy's tax liability has already been sealed.

The ball is considered by the IRS as a "treasure trove" and will be taxed as ordinary income based on its value when acquired. Most estimates put the ball's value around $500,000 which throws Mr. Murphy into the top tax bracket. Tack on another 7% or so for the state of New York and the total tax bill is around $210,000. That leaves about $290,000; not a bad day's work, but I certainly wouldn't risk the ball's value falling below that tax liability by holding it too long. That's worse than striking out in the bottom of the ninth, bases loaded.

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