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I remember ichiro's last contract with the mariners was going to be paid out over 25 years or something. The guy makes a ton from commercials in japan, but mayb

I remember ichiro's last contract with the mariners was going to be paid out over 25 years or something. The guy makes a ton from commercials in japan, but maybe this is actually a decent move? Edit: on second thought since star athletes are getting paid in the millions, prorating it over 20 years won't change that much in the grand scheme of things. Maybe something like 400k*20% each year before they hit the max bracket anyways.

icambron 13y ago
Interesting. From Wikipedia: > The Associated Press reported that Ichiro's contract extension defers $25 million of the $90 million at 5.5% interest until after his retirement, with payments through 2032 If he retires at the end of next year, he'll make that money over 18 years. If he made it all at once, today, he'd pay about 9.8 million of that 25 in taxes (just punching things into a naive tax calculator; I'm sure his accountants would improve things. OTOH, it's also slightly low because it puts him in a lower tax bracket for the first 400K, which he doesn't get because of the other income he has). Ignoring the interest for a moment, splitting 25 million over 18 years he pays a total of 8.9 million. So he saves a million dollars doing it this way. Not bad. With the interest, he'd get paid more; it looks like 1.8 million per year for 18 years, so 32.4 million instead of 25. That's a bit of a raw deal if he has to pay that as regular income tax, since if he got the money now and put it in the market, it would perform about as well, but would get taxed at a capital gains rate. All in all, I suspect this is a compromise with the Mariners to alleviate cash flow and luxury tax pressure more than it's a shrewd tax move.