First Northwest Industries of America, Inc. v. Commissioner of Internal Revenue

WRIGHT, Circuit Judge:

This case presents a novel issue concerning the tax treatment of a professional sports team. The commissioner appeals the Tax Court’s decision, First Northwest Industries v. Commissioner, 70 T.C. 817 (1978), and we reverse and remand.

I. BACKGROUND

Taxpayer purchased a National Basketball Association team, the Seattle Supersonics, in 1967. 1 It acquired 13 related rights:

1. The right to participate in a special expansion draft in which it could select 15 veteran players from ten existing teams;

2. The right to participate in the 1967 college draft;

3. The right to…