Aroldis Chapman about to incur multi-million dollar tax liability

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Sharp observation by ESPN’s Jorge Arangure, Jr.:  If Aroldis Chapman doesn’t sign a deal and receive his bonus by Thursday at midnight, he’s going to get a multi-million dollar tax bill that he could have totally avoided.

Why? Because, Arangure reports, signing bonuses that are received outside the U.S., by a non-U.S.
resident, and in a tax year in which the person did not work in the
U.S., are not subject to U.S. taxation.  Chapman currently lives in tax-free Andorra. He hasn’t pitched in the U.S. Thus, any money he makes in 2009 can’t be taxed in the U.S. He will, however, work in the U.S. in 2010, so he will be subject to U.S. taxation on all earnings after the first of the year regardless of where he lives.   If, as expected, he gets tens of millions of dollars, that’s going to be a several million-dollar tax bill.

Arangure’s source on this, agent Joe Kehoskie, says “As far as I’m aware, neither the Hendricks brothers nor Rodney
Fernandez (who represent Chapman) have ever completed a contract for a
foreign free agent, so I bet this issue flew right under their radar.”

Maybe. But it may simply be that the market just hasn’t developed for Chapman like everyone thinks it eventually will, and that rushing to save a couple million in taxes now could cost him several more million in the value of the contract he ultimately signs.

Still, somewhere, the agent that Chapman fired to sign with the Hendricks brothers is smiling. And amending his lawsuit to claim that if he were still representing Chapman, he would have imposed a December 31st deadline to all interested clubs in an effort to avoid the bill.

Mets, Orioles have discussed a Matt Harvey trade

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Ken Rosenthal of The Athletic reports that the Orioles and Mets have discussed a trade for Matt Harvey.

Rosenthal says the discussions have involved a reliever going back to New York and observes that that Harvey and Brad Brach are projected for similar salaries in their final arbitration years which could make a financial match.

There have been a handful of Harvey rumors over the past couple of days, with a report coming out yesterday that the Mets have spoken with at least two teams about their fallen ace. Jon Heyman said today that the Rangers may have been one of those teams. Maybe the Orioles are the second or, perhaps, the third?

All if this has to be pretty deflating if you’re a Mets fan, given the promise and dominance Harvey showed before injuries waylaid him the past two seasons. Harvey is still just 28 but he made only 18 starts and one relief appearance last year, posting a 6.70 ERA with a 67/47 K/BB ratio in 92.2 innings.

If the Mets can’t find a trade partner this winter, they’ll clearly hope for him to rebound at least a little bit in 2018, allowing him to regain some trade value.