Posted on 07/28/2014 3:55:54 PM PDT by iowamark
LOS ANGELES -- A judge ruled against Los Angeles Clippers owner Donald Sterling on Monday in his attempt to block the $2 billion sale of the Los Angeles Clippers to former Microsoft CEO Steve Ballmer.
In the tentative ruling, Superior Court Judge Michael Levanas sided with Sterling's estranged wife Shelly Sterling, who burst into tears when the ruling was announced.
"I can't believe it's over. I feel good," she said.
Shelly Sterling negotiated the sale of the team after the 80-year-old billionaire was banned by the NBA for making offensive remarks about blacks.
She sought approval from a probate judge for the deal she struck after removing her husband from the trust that owned the team when doctors found he had signs of Alzheimer's disease and couldn't manage his affairs.
Donald Sterling claimed his wife deceived him about the medical exams.
He later revoked the trust after she negotiated the record-setting sales price and his lawyers argued that the move killed the deal. They said the case didn't belong in probate court because the trust had been dissolved...
With the NBA threatening to seize the team and auction it, Sterling initially gave his wife of 58 years permission to negotiate a sale but then refused to sign it. He said he would sue the league instead and then revoked the trust...
(Excerpt) Read more at mercurynews.com ...
I think it would be fair to say that a decision to not sell the Clippers for $2.1 billion is a strong indication of a mental infirmity. I suppose the same could be said about a person willing to spend that much to purchase the Clippers.
But this whole thing wasn’t started because of his disability. It was started because of his racism, and the punishment was him being forced to sell.
Granted, should could still get control, and apparently has now, but the NBA should not be able to force her to sell, due to his disability..obviously he was not of sound mind. Giving her ownership is one thing, forcing her to sell because she has a disabled husband is another entirely different thing, it seems to me, at least.
Or a wife who is sick of her husband's antics and is looking to cash out.
Two problems wrong with that statement. One, it wasn't a forced sale. Nobody forced Shelly Sterling to sell the team. Not the NBA. Not the courts. And two, even if the NBA had forced them to sell then it's only non-taxable if the proceeds are invested in a like industry within a certain period of time. A like industry being another sports franchise. What league would allow Donald Sterling in as an owner?
The team is owned by a family trust and she is co-trustee. With him being declared mentally incompetent to manage the affairs then she takes over.
But he wasn't forced to sell. The other league owners never voted to strip Sterling of his team. The league may have facilitated finding some one stupid enough to pay $2 billion, but this was negotiated by Shelly Sterling on her own.
Granted, should could still get control, and apparently has now, but the NBA should not be able to force her to sell, due to his disability..obviously he was not of sound mind.
Force her to sell? I wish someone would force me to sell a piece of property for three times it's real value. Shelly Sterling is making out like a bandit on this. She's at least half of $2 billion richer.
Yeah, upon reading, they never actually got to the vote to force the sale.
Sports franchises are considered part of the entertainment industry. Any purchase of stock or bonds or equity or ownership of any entertainment industry (MSNBC, CBS, FOX, Sony, etc.) or even royalties to entertainment property rights would qualify.
No. According to the law the proceeds have to be converted into property similar or related in service or use to the property so converted. Similar or related in services or use would be another sports franchise. I'm sure he could buy the entire Lingerie Football League and still have money left over for a foreign soccer team and that would take care of it.
And you’re still stuck with the fact that it wasn’t a forced sale so the tax law in question doesn’t apply anyway.
(A) Nonrecognition of gain --
If the taxpayer during the period specified in subparagraph (B), for the purpose of replacing the property so converted, purchases other property similar or related in service or use to the property so converted, or purchases stock in the acquisition of control of a corporation owning such other property, at the election of the taxpayer the gain shall be recognized only to the extent that the amount realized upon such conversion (regardless of whether such amount is received in one or more taxable years) exceeds the cost of such other property or such stock. Such election shall be made at such time and in such manner as the Secretary may by regulations prescribe. For purposes of this paragraph ...
Further, this is a forced sale as it qualifies as a "seizure". In the law of civil practice, the term refers to the act performed by an officer of the law under court order when she takes into custody the property of a person against whom a court has rendered a judgment to pay a certain amount of money to another.
Believe me that Sterling has enough lawyer clout to make it stick. Further, it would counter intuitive for a court to say that the sale has to go through and then invalidate that order by declaring that judgement is optional. There is no doubt that Stirling will use this judgement in tax court to show that the sale was forced and as such, is able to take advantage of section 1033.
Section 1033 — Involuntary Conversions
(a) General rule --
If property (as a result of its destruction in whole or in part, theft, seizure, or requisition or condemnation or threat or imminence thereof ) is compulsorily or involuntarily converted --
The threat of requisition and seizure was communicated by the NBA commissioner. For a threat to be valid, it only requires that the threat be possible (NBA can vote to strip an owner of the team) and that the threat be communicated. Added to the fact that a judge in a court of law sided with the NBA sale, this most definitely qualifies as an involuntary conversion.
But you still have the 'similar or related in service or use' issue. I don't think that the courts will accept anything other than another sports franchise as filling that requirement.
Further, this is a forced sale as it qualifies as a "seizure". In the law of civil practice, the term refers to the act performed by an officer of the law under court order when she takes into custody the property of a person against whom a court has rendered a judgment to pay a certain amount of money to another.
Except that the court did not take custody of the property. Nothing was seized. The court ruled that because Donald Sterling had been ruled mentally incometent then Shelly Sterling was in charge of the trust and could sell the team as she wished. Nobody forced her to sell.
Believe me that Sterling has enough lawyer clout to make it stick. Further, it would counter intuitive for a court to say that the sale has to go through and then invalidate that order by declaring that judgement is optional. There is no doubt that Stirling will use this judgement in tax court to show that the sale was forced and as such, is able to take advantage of section 1033.
Sterling has been declared mentally incompetent and the judge has ruled that Shelly Sterling can proceed with the sale. Sterling will wind up suing nobody but his wife.
Except that again Shelly Sterling was under no duress when she sold the team, and instead had the NBA assist her in finding a buyer. She had also idemnified the NBA against any legal actions by her husband or any other member of her family. So if Donald Sterlng sues the NBA and wins then she has to pay him.
Actually she was under duress. The NBA had already threatened the forced sale.
This is the precipitous event that caused her/Sterling to seek a buyer for the team. No different than a threat letter by a city to issue a lien against a property. Prior to the announcement by the commissioner of the NBA, no buyer was being sought by Sterling.
The court does not have to take posession of the property in question. It directed the sale against the wishes of the owner of that property. That meets the requirement of seizure.
For purposes of Section 1033, the restriction means that the end use of the new property must be substantially similar to the end use of the old property. So for example, a taxpayer that lost timberland property used for logging could not replace that property with a parking lot and qualify for non-recognition under Section 1033.
Property that has been converted via seizure, or requisition or condemned enjoys more liberal treatment, and instead of being judged by the “similar or related in use” standard, is determined by expansive definition of like-kind similar to that of Section 1031. This means for the purposes of condemned property, the replacement property will be deemed to be like-kind and the requirements met so long as both the condemned and the replacement property are characterized as the same type of property by law.
Thus the property, stock in an entertainment corporation) would potientially be converted to stock in an entertainment corporation. This would enable Sterling to convert to just about any entertainment industry company or holding.
For example, lets consider a farm that has been involuntary converted that is in the agriculture business (grows corn). Assuming that the conversion was to stock of another agriculture business (cattle ranch), it would be of “like-kind”.
Vote to acutally force the conversion is not required under IRS section 1033. All that is required is the threat of conversion which was communicated by the NBA commissioner and it is worth noting that the NBA could have very well carried out that threat. Thus it qualifies under current tax code.
It started because he earned himself a big fat pile of bad press. A lot of which focused on the fact that BOTH Sterlings have a long history of racial issues. Focus was always on Donald, but Shelly’s action have actually been the ones that cost them in a couple of lawsuits. And that bad press was damaging the value of the league. But they were never forced to sell, she reached an agreement with Balmer before the next owners meeting. They might have been forced to sell, but it never got that far.
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