I’m late to the Shohei Ohtani $700 million contract hype, but Lindsey Adler and Richard Rubin at WSJ cut straight to the most important part of the story. There’s some tax planning genius at work off the field by Ohtani.
Below is the WSJ excerpt.
And above is some genius Ohtani-as-accountant artwork by Dennis.
Don’t miss the IRS logo on the jersey. Even they think the Ohtani tax plan is genius enough to sponsor, LOL.
Per the terms of his deal, Ohtani won’t take interest on the deferrals, which means the present day value of his $700 million contract is around $460 million.
The massive deferrals were Ohtani’s idea, according to a person in the player’s camp. He proposed the unique structure when he was far into negotiations with the Dodgers, as a way to lessen their payroll obligation and allow the team to sign additional players around him.
The deferrals will result in tax benefits for Ohtani himself, according to a person familiar with his negotiations. During the first 10 years, he will be subject to state income taxes on his annual $2 million salary in California and other states where the Dodgers play. But by the time he starts receiving the $68 million payments, he may be able to avoid state income taxes by living someplace like Florida without an income tax, or by moving back to Japan.