Sports & Talents Lawyers Discuss 409A

It was interesting to listen in on a 409A discussion that was geared towards a specific industry. The ABA-CLE Program noted some interested points:

* The sports and talent industry, including attorneys, were indeed late to the game and for the most part started addressing 409A only as the transition period was ending.

* Section 409A is only 4 pages, but the IRS needs over 200 pages of regulations and guidance to explain those 4 pages.

* Copyrights and similar intellectual property rights are "property" and therefore not subject to 409A. Therefore, it is important that documents with artists and other industry providers are drafted with language that discuss "property transfers" rather than as "providing services."

Questions to Professor Sobel

Sports and Entertainment Agents Gearing up for 409A

File under "better late than never" as sports and entertainment agents are gearing up for Section 409A through an upcoming ABA Webcast. Welcome to the party, and we are happy to help spread the word. But our advice is to seek an expert for 409A assistance.

Below is a summary of the webcast and information on how to register. Also, see our prior posts from last year regarding the NFL and its struggle with 409A and other tax law issues.

"Among other things, the program will explore:

·What kinds of athletes and entertainers are exempt or may be 409A, and why they are or may be exempt

·What few kinds of compensation arrangements are exempt, and why most are not

·How non-exempt compensation arrangements must be structured in order to comply with 409A's requirements

·When compensation must be paid in order to comply with 409A's requirements

·Why the use of loan-out corporations does not eliminate the risk of 409A non-compliance, and may even increase that risk

·Why advances against deferred compensation -- even as part of a contract renegotiation or extension -- result in non-compliance

·Why the use of deferred compensation as loan collateral results in non-compliance (according to the Regulations)"

ABA Webcast Information - HERE