Ex-Memphis Grizzlies Owner Can’t Deduct Players’ Deferred Pay

The IRS rightly denied a former NBA Memphis Grizzlies owner a tax deduction of about $10.7 million tied to player deferred compensation liability that the team’s buyer agreed to assume, the U.S. Tax Court ruled.

Hoops LP owned and operated the Grizzlies from 2000 until it sold the franchise in 2012, including after the team moved from Vancouver to Memphis in 2001. Through the purchase, Memphis Basketball LLC assumed responsibility for paying deferred compensation owed under NBA Uniform Player Contracts to Zach Randolph and Mike Conley.

At the time of the sale, the deferred compensation liability was ...