Prorated undrafted rookie/soph minimums calculated for tax?

[MarkDeeks]

For tax purposes, first and second year minimum salary contracts for players that team didn't draft count as third year minimums, when tax is calculated at the end of the season.

I assume this also applies for prorated ones, and thus also those waived before season's end. However, to be sure, does it?

Long story short, does Elias Harris count as $100,000 or $176,859 for tax purposes?

Ta.

[DBoys]

Mark, the applicable CBA wording says:

(2) For purposes of computing the amount of tax a Team owes:

(i) a Team’s Team Salary shall be the sum of:
(A) its Team Salary as of the start of its last Regular Season game,
plus - all Performance Bonuses excluded from Salary under Article VII, Section 3(d) but actually earned by the player during such Salary Cap Year,
less - all Performance Bonuses included in Salary under Section 3(d) above but not actually earned by the player during such Salary Cap Year;
plus (B) with respect to any trade that occurs following the conclusion of the Team’s last Regular Season game, the portion of any trade bonus earned by a player that is included in the Team’s Team Salary for such Salary Cap Year,
plus (C) any amount that is added to the Team’s Team Salary for such Salary Cap Year following the start of the Team’s last Regular Season game pursuant to Section 4(a)(1)(iii) above;

and (ii) the Salary attributable to a Contract between a Team and a Free Agent with zero (0) Years of Service or one (1) Year of Service shall be deemed to be the greater of (x) such Salary or (y) the Minimum Player Salary that would be applicable to a player with two (2) Years of Service.

Clearly it's the final section above that is in question. I'd say it means that partial year payout is to be recalculated to the minimum rate that would have been paid and applicable to a player with two (2) Years of Service.

[answerthink]

Yes. Minimum salary contract signed by free agents with zero or one year(s) of experience are taxed at the minimum salary for two year veterans for tax purposes, even if their contracts are prorated because they signed non-guaranteed contracts and were waived prior to the guarantee deadline. Among the many examples is Jarvis Varnado with the Boson Celtics from last season.

I have Elias Harris counting $100,000 against the cap and $176,859 against the tax, as per my own calculations (34 days), which may or may not be correct.

[MarkDeeks]

Makes you wonder why they kept him so long, really.

[MarkDeeks]

What about those who were drafted by the team, but signed only one year deals, then re-signed with them? Are they now considered free agents and would thus count as $884,293 instead of $788,872? I am thinking specifically of Robert Sacre.

[MarkDeeks]

Or those signed to a minimum salary by the team that drafted them, only to be traded to another? They still signed as draft picks and so would count as $788,872, right? I am thinking specifically here of Quincy Acy.

[Dunkenstein]

What about those who were drafted by the team, but signed only one year deals, then re-signed with them? Are they now considered free agents and would thus count as $884,293 instead of $788,872? I am thinking specifically of Robert Sacre.

Sacre counts $884,293 for tax purposes this year.

[Dunkenstein]

Or those signed to a minimum salary by the team that drafted them, only to be traded to another? They still signed as draft picks and so would count as $788,872, right? I am thinking specifically here of Quincy Acy.

You are correct because Acy signed a 3-year contract last season. The trade had no effect on his tax hit.

[MarkDeeks]

Ta