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#  Donald Sterling: Worth More Dead than Alive

***![](https://mail.citywatchla.com/images/stories/May-2014/12035s.png)LA WATCHDOG***-The inheritance tax will have a major impact on the estate of Clippers’ owner, Donald Sterling.

If Sterling sells the Clippers prior to his death for an estimated $1 billion, he will have to pay Uncle Sam and Sacramento an estimated $350 million in capital gains and state taxes. Sterling would clear $650 million, not a bad return on his $12 million investment over 30 years ago.

Written by Jack Humphreville.

May 01 2014

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***![](https://mail.citywatchla.com/images/stories/May-2014/12035s.png)LA WATCHDOG***-The inheritance tax will have a major impact on the estate of Clippers’ owner, Donald Sterling.

If Sterling sells the Clippers prior to his death for an estimated $1 billion, he will have to pay Uncle Sam and Sacramento an estimated $350 million in capital gains and state taxes. Sterling would clear $650 million, not a bad return on his $12 million investment over 30 years ago.

Upon his death, his estate will have to pay an inheritance tax bill on the $650 million in net proceeds of around $250 million, resulting in after tax proceeds of “only” $400 million to his estate and heirs.

However, if the Clippers are sold after his death, the only tax would be the inheritance tax of around $400 million as the tax basis of the club would be stepped up to the market value.

The net proceeds to his estate would be $600 million, a $200 million difference.

There are also many legitimate ways that the estate can adjust the value of the Clippers to save on inheritance taxes. This would depend on corporate structure (a partnership, a LLC, or corporation) and Sterling’s actual ownership interest in the Sterling Trust, the owner of the team.

The estate could legitimately argue that the value of the team is substantially less than $1 billion.

Furthermore, if Sterling has less than a 50% interest in the Sterling Trust, the executor of his estate may claim a discount to the market value because the estate does not have a controlling interest. Ironically, if Sterling does not own 50%, his holdings are deemed to be a “minority” interest.

There also many other games that Sterling can play, including selling the team in a tax free transaction that will allow him to avoid or defer any capital gains and state taxes.

In any case, the sale of the Clippers may be very complicated and litigious.

Can the National Basketball Association and its owners force Sterling to sell the team? Can the NBA force members of the Sterling family to sell their ownership interests in the team? Can the NBA force Sterling and the other family members to sell the Clippers at a discount to the team’s true market value? Or can the NBA seize the team without any compensation to Sterling and his family?

As far as LA and the Clipper Nation are concerned, the sooner we are rid of our diminutive Donald, the better, even if this old, bigoted fool who cannot keep it in his pants walks away with a billion.

Now that Sterling is history, it is time for LA to support Doc Rivers, his coaching staff, and the players.

Our economy can use a few more playoff games at Staples.

***(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee, The Ratepayer Advocate for the Greater Wilshire Neighborhood Council, and a Neighborhood Council Budget Advocate. Humphreville is the publisher of the Recycler Classifieds --* [*www.recycler.com*](http://www.recycler.com/)*. He can be reached at:*  *<lajack@gmail.com>. Hear Jack every Tuesday morning at 6:20 on McIntyre in the Morning, KABC Radio 790.)*  **-cw****

***CityWatch***

***Vol 12 Issue 36***

***Pub: May 2, 2014***

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