BELICHICK'S 500K FINE: A TAX WRITE OFF?

By Scott Daniels, Esq., NFL Draft Bible

By now, NFL fans are well aware of Spygate. Bill Belichick's arrogance finally caught up with him and his inability to follow the rules were exploited in week one of this season. I don't want to dwell on on the specifics of the incident as the media world has already beaten this topic to death.

What I do want to dwell on is the rumor lurking that Belichick might try to "write off" the 500K fine levied by the NFL as a business expense. Would Belichick actually try to pull this off? More importantly, can he legally deduct this fine as a business expense on his tax return?

According to the Internal Revenue Service (IRS), "to be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and appropriate for your trade or business." Leave it to the IRS to be as vague as possible. You could justify anything as an ordinary and necessary expense under these rules.

It's not inconceivable that one could make the argument that fines are "common and accepted" and "helpful and appropriate" in the NLF. Players and coaches are practically fined on a weekly basis. A fine is the most common form of punishment in the league. They are certainly common and undoubtedly appropriate. If the IRS were to agree with this, Belichick could successfully classify his fine as a business expense.

Tax Attorney Michael Mandale, Managing Partner of the The Mandale Law Firm, a boutique tax controversy resolution firm based out of Philadelphia, feels that Belichick will have no problem writing off the fine. "In my opinion, Belichick's [possible] deduction of the fine is arguably proper in that both his actions and the fine imposed against him are an ordinary and necessary part of the business in the NFL," said Attorney Mandale.

He went on to rationalize his theory by saying; "The organization pays it's coaches with the expectation that they will strive to be the best they can be. Spying on opponents is a direct way for individual coaches to excel and gain the edge that all competitors in the league are aiming for. Not surprisingly, the imposition of fines in all professional sports is an almost everyday occurrence; this particular fine is no exception to the trend."


When I asked if the fine would pass muster under the "necessary" prong required by the IRS, Attorney Mandale said; "In the professional sports industry, spying on opponents is a sometimes necessary business tactic which enhances both the coach's and team's ability to perform. The imposition of fines is simply a method through which the NFL aims to discourage unsportsmanlike conduct by team leaders."

This would make for quite an interesting move by Belichick. The fine was levied on him to punish him for his actions. The rationale of all fines are based on the theory of retribution. But if Belichick is able to write off this fine, he loses nothing financially. Zero monetary loss.

But would the public even find out if Belichick wrote the fine off?

"Every one's tax returns, celebrity or not, are treated by the IRS as confidential," said Attorney Mandale. "If his deduction were to be ruled as unqualified after his initial filing and he chose to seek redress in the courts, eventually, it would become a public record," he said in response to whether the public would ever find out.

Attorney Mandale feels it is likely that the IRS will allow the write off. "The NFL hands out fines on a regular basis. There is no doubt the IRS will see a tax write off of this kind as an ordinary and necessary expense within the NFL," said Attorney Mandale.

Belichick and the Patriots will also lose a draft pick in next year's draft. A draft pick and a hefty fine - Was it enough? Not if Belichick is able to itemize the fine as a business expense on his tax return.

Will we ever find out the truth? Probably not.

But if Belichick's arrogance is any indication, the IRS may be the deciders of his punishment, or lack thereof.



Attorney Michael Mandale can be contacted at:

The Mandale Law Firm, P.C.
1310 Industrial Blvd., Ste. 200
Southampton, PA 18966
http://www.mandalelaw.com/
1-888-LIEN-FIX
(215)-355-1687