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In case you haven’t heard, New England Patriots coach Bill Belichick was recently fined $500k by the NFL after his staff was caught videotaping the New York Jets’ defensive signals for future reference. What’s particularly interesting about this case is that according to a variety of tax experts, Belichick might be able to deduct the $500k fine as a business expense..
Apparently, this issue turns (at least in part) on whether or not Belichik broke the law, as fines paid to the government for a violation of the law cannot be deducted. Short of that, “ordinary and necessary” business expenses are deductible.
According to Myron Grauer of the Capital University Law School, the fine is deductible because it’s an “ordinary” expense:
“…in this day and age, it probably is â€˜ordinary’ for coaches and players in professional sports to cheat and, if caught, to be fined by the league, the fine levied on the Patriotsâ€™ coach can be viewed as an ordinary and necessary business expense.”
Mike McIntyre of Wayne State University went on to argue that:
“The fine was for violating a rule, not for cheating. No professional football game is played without someone breaking the rules. It is expected that people will break the rules.”
Of course, the issue of whether or not Belichick’s actions were “ordinary and necessary” for an NFL coach is debatable. In fact, if we go too far down that road, college football coaches would be allowed to deduct money that they pay to prized recruits to get them to commit to their school. Sure, it’s against NCAA rules, but if it’s not illegal, and if everyone is doing it, then it’s ordinary and necessary… Right?