Clippers' $30M Fine May Be Tax-Deductible While Kawhi Leonard's $700K Is Not
The NBA fined the Los Angeles Clippers $30 million and player Kawhi Leonard $700,000 for circumventing salary cap rules. The fines are part of an investigation by Wachtell, Lipton, Rosen & Katz into violations involving team owner Steve Ballmer, who was suspended from league activities for a year. The Clippers' fine is likely tax-deductible because the NBA is considered a private entity rather than a government body, allowing it to be treated as an ordinary business expense. As a pass-through entity, this deduction would reduce Ballmer's taxable income at the personal level. In contrast, Leonard’s $700K payment cannot be deducted due to changes in tax law that eliminated deductions for employee-related expenses after 2018. The Clippers have stated they will challenge the findings through arbitration and no payments have been made yet. If Leonard's fine is reclassified as a repayment of previously taxed income, it could alter his tax situation significantly.
Topics: Clippers fines Kawhi Leonard NBA tax law