Salary Cap Question: Payments Returned Due to Breach of Contract

[Thoth]

Question about reclaiming money from corrupt guys.

Suppose someone like Vick gets a check for say $30,000,000, and then pays (to keep it simple), 50% in taxes, or $15,000,000. Further suppose he is forced to give the entire bonus back due to breach of contract (no this wouldn’t happen, the broad concept, rather than specifics of Vick's case, is point of question).

Is he required to give back $30 million, making his effective loss $45 million, or just the after tax part?

I'm sure someone in the Redskins front office will answer immediately, ha, ha.

Just reading all the Vick garbage got me wondering.

Thanks for anyone who can answer.

[Kurd Cudins]

Vick is only going to have to give back $3.5M. there was a precedent set with Ashley Lelie. The remaining money that the Falcons are going after was actually option bonus money that was turned into a signing bonus and then prorated. It will come down to whether or not that constitutes a signing bonus. Of the original signing bonus, there is $3.5M left. I don't think he'll have to give anything else back.

edit: what the falcons will do is release him and designate him a June 1st cut to spread it over this year and next.

[Tyron Biggums]

From my understanding the Flacons are seeking 22 mil. Not sure how much of his signing bonus is still prorated.. Mayve they settle for 11 mil.. either way he is f'd.

[Thoth]

That's my question. More in general, than just Vick's case.

Suppose Vick was paid 22 mil. He's already paid taxes at the highest bracket, to the tune of millions of dollars? So if he had say 11 million after taxes, he has to magically come up with the other 11 million he paid in taxes if he owes the 22 million? I know he probably spent some, etc., but is there a case of returned bonus money where this is known, and has set a precedent?

[NYCskins]

You can file an amended tax return.

[SkinsFTW]

You can file an amended tax return.

That should get him his money back.

I wonder about players who get fined. They can probably do the same thing.

[chipwhich]

You don't pay taxes on money you don't earn. So no you wouldn't owe 45 mill if you got paid 30 mill, taxed 15 mill. If he paid those taxes, he would amend it and get it back.

Come on now, nice try.

[oriolesfan93p]

There was a president set with Ricky Williams also, he was given a signing bonus, then was taxed on it, and then quit the team, was forced to send his signing bonus money back to Miami, but the IRS still took taxes on it and he was not able to recoup any of that money.

The fact that he was broke after this whole thing is why he even tried to come back into the league a year later.

The Breach of contract was that Williams retired, he was forced to give a prorated portion of his money back, the IRS viewed his having to give the money back a penalty and therefore usable as a loss on that years taxes and not a change in the fact that he did indeed receive the money as income in the first place, it may be dirty but that was the ruling.

[Mr. S]

can't wait to learn more in Contracts Class, that's all I'll say.