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which the payment is includible in the the proposition that either the buyer deferred compensation at the time of
employee’s gross income, not to create assumes the liability and pays the seller sale might allow an entity in Hoops’s
an asymmetry in which a liability was the net cash amount or the buyer pays position to deduct the deferred compen-
never included in basis or deducted. the gross cash amount and the seller uses sation liability, this would not necessarily
The court, noting that the parties a portion to satisfy the liability. The Tax be welcomed by the players because it
agreed that Hoops had an obligation Court, however, found that these cases would accelerate the inclusion of the
to pay Randolph and Conley deferred did not apply to Hoops because they deferred compensation in the players’
compensation that was discharged did not involve deferred compensation income and possibly result in their
due to the sale of the Grizzlies, subject to Sec. 404(a)(5), under which incurring a 20% additional tax under
concluded that under Sec. 1001, Hoops Hoops was not entitled to offset or Sec. 409A.
was required to take the deferred reduce the amount realized on the sale Hoops LP, T.C. Memo. 2022-9 ■
compensation liability into account in by the deferred compensation liability.
computing its gain or loss from the sale.
In support of its contention that Reflections Contributor
it was entitled to offset or reduce its Because Hoops must include the pres-
James A. Beavers, CPA, CGMA, J.D.,
amount realized on the 2012 sale by the ent value of the deferred compensation
LL.M., is The Tax Adviser’s tax techni-
deferred compensation liability, Hoops liability assumed by the buyer in the sale
cal content manager. For more infor-
cited James M. Pierce Corp., 326 F.2d proceeds, as a result of the Tax Court’s
mation about this column, contact
67 (8th Cir. 1964), and Commercial decision, it is taxed on money it has
thetaxadviser@aicpa.org.
Security Bank, 77 T.C. 145 (1981), for not received. While simply paying the

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