Abstract

http://ssrn.com/abstract=999669
 
 

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Tax Magic: Did Billy Donovan Pull Income Out of a Hat?


Jeffrey H. Kahn


Florida State University - College of Law

Joshua P. Fershee


West Virginia University - College of Law


Tax Notes, Forthcoming

Abstract:     
Billy Donovan is the men's head basketball coach at the University of Florida. Donovan agreed to become the new coach of the Orlando Magic, a professional basketball team and he signed a five-year, $27.5 million dollar contract with the Magic.

Almost immediately after signing the contract, Donovan had second thoughts about joining the Magic and leaving the University of Florida. After some negotiation, the two sides reached an agreement that allowed Donovan to walk away from the employment contract with the Magic and remain the head coach at the University of Florida. This article addresses the question of whether Donovan realized income from those transactions.

In examining the question of whether Donovan realized taxable income we will discuss the tax consequences of two possible circumstances. In the first circumstance, we assume that the Magic released Donovan without receiving any compensation from him. The second (and seemingly more accurate circumstance) assumes that the Magic, in exchange for releasing Donovan from the employment agreement, required as compensation his execution of the non-compete contract.

Number of Pages in PDF File: 10

Keywords: Tax, Income, Donovan, Employment Contract, Non Compete

JEL Classification: H20, H24

Accepted Paper Series


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Date posted: July 14, 2007  

Suggested Citation

Kahn, Jeffrey H. and Fershee, Joshua P., Tax Magic: Did Billy Donovan Pull Income Out of a Hat?. Tax Notes, Forthcoming. Available at SSRN: http://ssrn.com/abstract=999669

Contact Information

Jeffrey H. Kahn (Contact Author)
Florida State University - College of Law ( email )
425 W. Jefferson Street
Tallahassee, FL 32306
United States
850.644.7474 (Phone)
HOME PAGE: http://www.law.fsu.edu/faculty/jkahn.html
Joshua Paul Fershee
West Virginia University - College of Law ( email )
Box 6130
Morgantown, WV 26506
United States
304-293-2868 (Phone)
HOME PAGE: http://law.wvu.edu/faculty/full_time_faculty/joshua-p-fershee

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