When Characterizing Golfer’s Endorsement Income, Image Matters

Post by
May 7, 2013

As a follow-up to our posts on the Goosen case regarding sourcing of a golfer’s income from sponsors (see here), we provide this update on the case involving golfer Sergio Garcia.  While they were not technically related cases, the significant overlap in issues and facts—not to mention witness testimony—meant that the outcome in Goosen partially determined the outcome in Garcia.

Both cases involved the character of the golfers’ endorsement income.  Coincidentally, the golfers each had an endorsement contract with the same brand—TaylorMade.  The golfers both argued that the lion’s share of the endorsement income was royalty income … Read More

Goosen Appeal Dismissed; Garcia Decision Looms

Post by
June 21, 2012

While this post is significantly belated, it’s still worth noting that the IRS (the original appellant) and Goosen (who had cross appealed) stipulated to dismiss the appeal to the D.C. Circuit back in February.

This doesn’t mark the end of the IRS’s fight with pro golfers over the character and source of income (especially royalty income).  Sergio Garcia disputed deficiencies on similar issues; his case was tried in the Tax Court back in March.  (Case No. 013649-10).  We’ll update you when the decision is issued in that case.… Read More

Service Appeals Goosen Tax Court Decision to D.C. Circuit

Post by
January 4, 2012

We posted in November 2011 about the Tax Court’s decision on the character and source of golfer Retief Goosen’s endorsement income.  The Service appealed that decision to the D.C. Circuit in December.  The D.C. Circuit case number is 11-1478.  We’ll post updates as the appeal progresses.… Read More

Tax Court Addresses Character and Sourcing Issues for Golfer’s Endorsement Income

Post by
November 1, 2011

In what appears may be the first in a series of cases on the endorsement income of non-resident aliens, the Tax Court was tasked with characterizing and sourcing the endorsement income for golfer Retief Goosen.  The court’s decision may impact how other athletes and entertainers structure their endorsement deals and indicates how taxpayers should expect the IRS to source royalty income in similar cases. 

Goosen, a native South African who is a U.K. resident, is subject to U.S. tax because playing professional golf in the U.S. amounts to engaging in a U.S. trade or business.  He had endorsement agreements with … Read More