You can’t say no services were provided. Kawhi looks at that scoreboard almost every night while sitting on the bench recovering from something.

Unless the contact was explicitly written that kawhi wouldn’t have to do anything, they’ll probably be able to take the expense 

“Asking the tax experts”

posts to r/nba

The tax experts are working on how to make it a write-off. Not trying to get people convicted.

Also Trump slashed the IRS budget which is the single most effective use of government money. The IRS brings in \(5 for every \)1 spent.

Depends, which party did the Daktronics CEO donate to?

Its not the IRS they should worry about. Its their investors, who can sue on account they were giving no show jobs while in a terrible financial situation.

It depends

Technically speaking there is nothing illegal or wrong, from a law standpoint, with Darktronics signing Kawhi to a contract, paying him money, and Kawhi doing absolutely nothing. As long as both entites don’t claim no wrong doing or breach of contract, its fine.

However, if Darktronics somehow claims a tax exemption or deduction based on Kawhi doing some endorsement work that he never did, then yes it will be a problem. The most likely outcome in that scenario would be a monetary penalty to Darktronics and nothing to Kawhi.

Lastly, remember the issue with Darktronics is with the NBA and the salary cap. The deal itself between Kawhi and Darktroincs can be considered legal under the law. For the IRS to get invovled Darktronics would have to get audited and get penalized for a specific set of circumstances that had to have occurred.

Getting paid for not doing anything is like pure capitalism and the american dream

It’s a publicly traded company, so there can be very legit big time problems with financial fraud or acting as a pass through for others

Love when Redditors think they’ve figured out something that contract lawyers haven’t.

The IRS lost like a quarter of its staff the last year. They’re not investigating anything

More likely the SEC, this could be fraudulent financial reporting.

Rich people live with a different set of rules. You should know this.

Bold of you to assume this IRS has the resources or interest in doing anything about it.

Is there anyone left at the IRS?

I think Kawhi should be investigated by the IRS, the CDC, the FBI, the ICC, the FDA, NATO, the IMF, Interpol, everyone. There is no greater crime a human is capable of than getting more money than allowed by the NBA’s CBA. I’m not sure if there has ever been a greater historic villain than Kawhi Leonard. In the future, children will grow up cursing his name! History will condemn us all for allowing a basketball player to be paid more than the contractual limit agreed upon in the league he played! If we do not put a stop to this, the entire rule based order of the world will disintegrate before our eyes.

The financial illiteracy of people never ceases to amaze me.

As others have said, Daktronics is a public company. As such, they are required to publish an annual report that includes their financial statements. All reputable companies, have those statements reviewed and audited by a public accounting firm that is independent from the company which then signs off on the accuracy of the information prior to publication. An attestation of the review is included in the annual report. Both the company and the accounting firm are on the hook for any shenanigans.

Internal and external audits are constantly being conducted mainly to make sure no one is stealing money or fudging numbers to make their results appear more positive than they are.

That being said all large companies have bureaucracy and inefficiency that leads to waste and spending money they didn’t have to spend: equipment not used, over ordering supplies, raw materials that expire and yes contracting for services they ultimately do not use.

Conditions change, workers make mistakes, estimates end up being incorrect all normal occurrences in big business. These things are not fraud

Considering our government is literally the embodiment of the “corruption is only bad if I’m not involved” meme, not sure what we’re expecting here

there is a conflict I see in all of this that I find interesting, would like others with legal experience input:

either clippers and Daktronics declare all of this as a legal transaction that the payout to Kawhi was not for any work performed as a spokesperson to the public but as a representative to the Clippers business, a dual employment contractor paid to just exist as a member of the Clippers as a business, which violates the CBA but avoids the IRS

OR

they declare it was a payment for work as a spokesperson and then have to prove there was work done to benefit the company Daktronics or they are in trouble with the IRS

now I researched my own speculation and its not all correct in that all parties can be found in violation of IRS regulations AND break the CBA, its not binary there are a lot of nuances based on what exactly was reported to the IRS as far as where the money came from and why it left Daktronics in a contract for a spokesperson and what that spokesperson delivered in return.

this is all very interesting, I am investing in popcorn immediately!

Not if they reported it correctly. But I’m not an expert.

IRS run by the President is suing itself to just gift the president cash.

And the IRS decided it’d never have to audit Trump or his family ever again.

IRS ain’t doing shit to a million dollar company,

I imagine that because they are publicly traded, shareholders would have a legitimate lawsuit against the company for spending tens of millions knowing it wasn’t to benefit the business. And the company can’t just say “oh well we got these donations to cover it” because then they’re admitting to money laundering. I guess to that point, there’s probably a pretty slam dunk money laundering case here

It depends on the contract, I assume they had lawyers look this over to make sure it wasn’t fraudulent.

For Daktronics, if they expensed the endorsment right away and kawhi did 0 advertising then yeah, IRS can fine daktronics for misreporting.

If Daktronics didnt write off the advertising expenses then theres nothing to sue. Theres also a bunch of sub classifications Daktronics can use to justify this expense.

Its a nothing burger even if the IRS did in fact audit Daktronics they aren’t going to disclose the findings to the public let alone name drop the specific incident. IRS only wants the money owed to them, nothing more, nothing less

IRS is mounting it’s case to Kawaii as we speak.

Legality wise, he committed the worst crimes- federal crimes- tax evasion.

He should be tried and sentenced, 100%.

This should be an FTC investigation for consumer fraud.

Question:

can a publicly traded company pay a person as a contracted entity who does no legitimate work for that company?

Answer according to Google:

No, a publicly traded company cannot legally pay a contractor who does no legitimate work. Such payments violate federal securities laws, tax regulations, and fiduciary duties, exposing the company and executives to charges of fraud, embezzlement, or false financial reporting.

Legal and Regulatory Risks

• Securities Fraud: Public companies must keep accurate books and records under the Securities Exchange Act of 1934. Fake payments misrepresent company finances to investors.
• Tax Violations: Paying for no work means the expense is not a legitimate business deduction. This can lead to tax evasion charges from the IRS.
• Breach of Fiduciary Duty: Executives and board members must act in the best financial interest of shareholders. Paying for ghost work steals company money.
• Internal Controls Failure: The Sarbanes-Oxley Act requires strict internal financial controls. Paying ghost contractors violates these rules and brings heavy fines or jail time.

More of an SEC thing but they don’t really do enforcement these days and this is probably grey enough that it wouldn’t be worth it.

You people really think violating the NBA CBA is some federal crime. Im sure these companies know how to write their own contracts to protect against a fraud charge. We’re all just hearing one side of the story and running with it imo. Id bet a decision is made and this blows over pretty quick. At the end of the day no one cares if these companies want to shell out more money. I doubt the NBA even cares as long as the player isn’t taking an obvious pay cut like the the Gary Trent Jr. situation.

Couple of tests to look at:

For it to be deductible, it needs to be an ordinary and necessary expense.  I would say it passes this test as endorsements are pretty common and most businesses do need to pay for some form of advertising.

But then you get into when you can actually take the deduction.  Assuming Daktronics is on the accrual method, what prevents a company from recording huge estimates to get large deductions?  There’s a 3-pront test of fixed, determinate, and economic performance has to have occurred.  Is it fixed?  Yeah, There’s a contract for it.  Is it determinate?  Yeah, we know the contract amount.  Has economic performance occurred?  That’s where I would say they tripped up.  If Kawhi didn’t do anything, he didn’t perform.  So failing that test, they should not be able to get a deduction until he performs.

I don’t think this administration is interested in investigating businesses. They should be investigating how the Trump family has made billions of dollars this past year, where the $2b slush fund is going, and where all of the money from selling Venezuelan assets has ended up

No.

Technically speaking the IRS defines a business expense as something that is “ordinary and necessary”. This obviously meets the ordinary standard as endorsement deals are accepted business practice. Where it could get sketchy is whether it meets the necessary definition. Like you mentioned, if he didn’t actually provide any service to them then you can argue it wasn’t necessary. It’s worth noting though that necessary simply means it was helpful and appropriate for your particular trade or business.

As you can see these definitions are incredibly broad. They could make the argument that the deal with Kawhi was helpful for their business from a networking standpoint or that being associated with him was a net benefit. Typically in situations like this the IRS doesn’t like to start splitting hairs. As long as Kawhi was reporting the income and all the paperwork was proper from the business standpoint, the chances of the IRS getting involved is very low.

Source: accountant and former IRS employee

Pablo really got r/nba debating tax law 🤣🤣🤣🤣

maybe, depends on if there is evidence that Daktronics was not expecting to get anything from Kawhi good enough to hold up in court (tax court, not normal court). if so, this is a gift and not an expense (and not a tax deductible gift).

I doubt anything Kawhi did was illegal. Unethical, sure. Against league rules, most definitely. But not punishable by law. Even if taxes were avoided in some way, he could just lay them back once notified.

Ballmer should be forced to sell the team imo. Take away the thing that billionaires use to boost their ego.

With a regular administration and a regular IRS, yes. But this administration and the current IRS have proven that they are the protector of the Epstein class

You should be asking state governments and tax authorities to investigate, specifically ones that hosted Kawhi for relevant away games subject to “jock taxes” on income from jobs performed in the state.

The theory of wrongdoing is that the Daktronics contract miscategorizes payments for his athletic performance as “endorsement payments”, so Kawhi and the Clippers illegally underpaid the relevant states.

Wild you think the IRS won’t just take an under the table check to put this all away lol.

They do not have the funds to investigate this, it would take them a decade. Does that make sense? No. Is it surprising? Also no.

The IRS is barely operational right now. Operates to keep the middle and lower classes paying their taxes but corporations and multimillionaires+ are not investigated