Accounting

How athletes can find tax savings with financial advisors

Published

1 year ago

April 24, 2025

For financial advisors and tax professionals, Michael Jordan’s first championship took meaning beyond the beginning of the Chicago Bulls’ legendary dynasty. Hoops fans recall the team’s 1991 National Basketball Association title over the Los Angeles Lakers as the first of the Bulls’ six championships under His Airness and company, a changing of the guard from the dominance of Magic Johnson and his “Showtime” squad.

Among advisors and tax pros working with a coveted client base of professional athletes and entertainers, though, the hardwood history came with dueling state-level duties that California and Illinois levied against each other. California hit the Bulls players and employees with a tax on income they earned in the state, but Illinois came back with its own levies. At the time, the duties earned the monikers, “The Jordan tax” or “Michael Jordan’s revenge.” But today all 50 states charge what has come to be known as a “jock tax.”

The need for planning

Those tax complications, and the significant differences between high- and low-tax states, often require athletes and performers’ certified public accountants to fill out dozens of returns. However, there are many strategies that provide opportunities for savings. These approaches include tax planning around the clients’ home residencies, charitable deductions or credits, and business entities such as an S corporation. Focusing on these available strategies means that an athlete could live in a high-tax state like California — which has a top rate of 14.4% on income — if they’d rather be there than a place with a rate of zero, said Nisiar Smith, founder of Elkins Park, Pennsylvania-based Courtside Wealth Partners.

Nisiar Smith is the founder of Elkins Park, Pennsylvania-based Courtside Wealth Partners.

“While our goal is to mitigate your tax liability, as your advisor, I’m not going to push you to live in those states, especially if you’re not going to have a quality of life,” Smith said in an interview. “If that’s where you want to live, then by all means, we just have to figure out other ways to mitigate your tax liability. … I don’t really advise them on where to live. I start backwards and ask, ‘Where do you see yourself?'”

Questions about residency are “very important” to athletes and entertainers, as is the fact that their tenures at the pro level or ability to fill large venues is often limited to “a relatively short period of time, when you compare it to different industries, to optimize their wealth,” said Frederick Blue, the head of new business development with Wells Fargo Wealth and Investment Management. A pass-through entity or trust planning could bring savings to, say, college athletes benefitting from “name, image and likeness” deals. In light of federal, state and local taxes, a paycheck of $10 million may begin to look much different, Blue noted.

“Net-net, that could potentially be cut in half, all associated with those three taxes,” he said. “So it’s important to look for strategies and work with a tax advisor.”

Potential strategies

The so-called jock tax assesses either a pro rata amount tied to the number of games in a given jurisdiction compared to an athletes’ salary or the state’s duty on a performer’s one-time earnings. Living in a zero-income-tax state can be “a huge win,” but the residency “must be intentional and well-documented,” said Ron Pac, the co-founder and managing partner of Westport, Connecticut-based RIA firm Trivium Point Advisory.

“Residency planning is about more than where you sleep, it’s about where your life appears to be anchored. This will require more than just a Florida license,” Pac said in an email. “Most income will be taxed where it’s earned, so tracking by source is critical. This is where you will see many athletes or entertainers use planning tools such as personal service entities, deferred compensation arrangements or image-right structuring to help address messy tax footprints into a well-managed strategy.”

For athletes and entertainers who may not be acquainted with the challenges of sudden wealth, the budgeting and tax planning should start when they begin collecting the large paychecks, Blue said. Their residency, or domicile, could come up in contract negotiations, as well.

“With some contracts in the tens and possibly hundreds of millions of dollars, seven-figure taxation savings can be realized through the right selection of a domicile,” according to a white paper released last month by Wells Fargo. “While the money you earn day-to-day playing for a team is likely to be taxed as income in the state in which you play, other payments may not. For example, signing bonuses for athletes are generally taxed by the state of the athlete’s residence at the time the bonus is received. So even if you are to play for a team located in a high-tax state, by domiciling in a no- or low-tax state you could save significantly on taxes for the signing bonuses. The language of your contract and the specific state in which you are to play weigh heavily on this analysis and should be overseen by a tax professional.”

Taylor’s taxes

International events may add further complexity to the equation, noted a guide to tax strategies for athletes and entertainers released earlier this year by professional services firm Armanino. On the other hand, a high-grossing performer like Taylor Swift traveling worldwide could deduct business expenses abroad, and athletes’ teams usually pick up other countries’ income tax tabs on their games, the guide notes. Of course, the athletes must still pay the IRS, and they could earn other income during their time overseas.

Back home in the U.S., the state and local tax deduction, incentives for energy efficiency and research and development, rules for equipment depreciation and credits for education or film, television and other entertainment could apply.

“The massive success of Taylor Swift’s Eras Tour didn’t just shatter records for attendance and ticket sales — it showcased the unique tax challenges entertainers and athletes face when working across multiple states and countries,” the Armanino guide said. “With most cities and states on her tour demanding their slice of the pie, savvy tax planning, including the strategic use of tax credits, becomes essential for maximizing profitability.”

Tax considerations deliver a lot of challenges and openings for sophisticated planning around events like the Olympics or legendary feats that result in a contractual performance bonus, Smith noted. To address these highly specific circumstances that affect his clients who are NBA and WNBA players, Courtside is — like many other wealth management companies — building its tax-related services. An upcoming merger will create a new unit of the registered investment advisory firm called Courtside CPA & Associates.

Tough competition for clients

Compared to some of the biggest wealth management firms, Smith saw a “need to be competitive, in terms of what in-house offerings am I giving them” and a way “to be able to offer those tailor-made services,” he said. Those include ensuring that they “plan ahead before signing contracts or booking appearances” for the tax impact and simply keeping track of where the athletes are earning money in the course of their hectic schedules, according to Smith.

“You gotta pay your taxes, period,” Smith said. “Second, you have to keep detailed records of where you work and perform, because that can be an Achilles’ heel for a lot of athletes.”

Advisors seeking to break into work on behalf of athletes or entertainers could consider pursuing the Sports and Entertainment Accredited Wealth Management Advisor, or “SE-AWMA,” designation through the College for Financial Planning, a Kaplan Company, Blue noted. That, “in itself, establishes a level of credibility when you are looking to build relationships in that space,” he said. Then they could follow that up with outreach to agents, business managers, sports attorneys, trainers and, subsequently, to the athletes themselves.

“Network as best you can. Build and cultivate relationships with what we call ‘centers of influence,'” Blue said. “Tell your story. What’s your value proposition to these prospective clients?”

Accounting

AI-Driven Automation and Continuous Accounting Frameworks

Published

3 days ago

August 15, 2026

Business Finance News

The accounting profession is undergoing a fundamental structural transition as enterprise finance departments shift from periodic month-end closes toward automated continuous accounting models. By integrating specialized machine learning algorithms directly into enterprise resource planning (ERP) platforms, chief accounting officers are transforming financial reporting from a retrospective exercise into a real-time operational asset.

The Shift from Periodic Close to Continuous Financial Reporting
Traditional accounting workflows heavily relied on manual data reconciliation, spreadsheet calculations, and multi-week closing cycles at the end of each fiscal period. In contrast, continuous accounting frameworks utilize automated software agents to process, validate, and post transactional data in real time as business activities occur.

Automated bank reconciliation tools cross-reference incoming bank feeds, invoice records, and purchase orders automatically. By resolving transactional variances instantly throughout the month, corporate accounting teams eliminate the traditional workload spikes associated with quarterly and annual closes.

Machine Learning in Audit Trails and Anomaly Detection
Advanced natural language processing (NLP) and machine learning tools are redefining internal audit and financial control environments. Automated systems analyze 100% of general ledger entries, identifying anomalous transactions, duplicate payments, and unauthorized journal entries in real time.

Rather than relying on random statistical sampling, corporate internal auditors can focus their attention on high-risk flags automatically surfaced by algorithmic monitoring platforms. This continuous risk assessment strengthens internal controls over financial reporting (ICFR) and significantly reduces fraud risk.

Evolving Roles for Accounting Professionals
As routine data entry and manual reconciliation tasks become fully automated, the skill set required for accounting professionals is shifting toward data analysis, system design, and strategic business advisory.
– Systems Governance: Accountants are increasingly responsible for monitoring algorithmic accuracy and managing data integration pipelines.
– Business Partnership: Finance professionals leverage real-time financial dashboards to advise operational leaders on margin management and working capital allocation.
– Regulatory Compliance Management: Accounting teams utilize automated platforms to ensure compliance with dynamic tax codes and international accounting standards.

Core Implementation Recommendations
1. Deploy Automated Reconciliation Tools: Integrate continuous transaction processing modules into existing enterprise ERP architectures.
2. Establish Algorithmic Governance Controls: Implement strict internal testing protocols to ensure automated accounting rules comply with GAAP/IFRS standards.
3. Reskill Accounting Teams: Invest in training finance staff on data analytics, workflow automation, and predictive financial modeling.

Accounting

Global ESG Reporting Standards and Double Materiality Compliance

Published

1 week ago

August 9, 2026

Business Finance News

Corporate accounting departments face expanding reporting expectations as international sustainability disclosure standards achieve regulatory enforcement across major global jurisdictions. Chief Accounting Officers (CAOs) and corporate controllers are establishing rigorous internal accounting controls to treat Environmental, Social, and Governance (ESG) metrics with the same data precision, auditability, and governance as traditional financial statements.

Regulatory Harmonization Under Global Sustainability Frameworks
The implementation of standardized sustainability reporting frameworks—notably rules established by international sustainability accounting boards—has created unified expectations for public and large private enterprises. Corporations must report standardized metrics covering greenhouse gas emissions (Scope 1, 2, and material Scope 3), energy utilization, workforce demographics, and supply chain governance.

In Europe and other participating international jurisdictions, double materiality principles are mandatory. Under double materiality, organizations must report both how external sustainability risks impact corporate financial performance, and how internal corporate operations affect surrounding environmental and social structures.

Integrating Sustainability Metrics into Core ERP Systems
To provide auditable non-financial data, enterprise organizations are integrating specialized carbon accounting and ESG management platforms directly into core ERP systems. Automated data collectors capture energy utility invoices, logistics fuel consumption metrics, and vendor compliance records in real time.

Establishing automated, traceable data pipelines ensures that non-financial reporting is supported by clear audit trails. This structured approach allows external financial auditors to provide reasonable assurance on sustainability disclosures during annual corporate reporting cycles.

Financial Impacts and Capital Market Disclosure
Accurate ESG reporting directly influences corporate cost of capital and institutional credit ratings. Commercial lenders and institutional asset managers systematically incorporate sustainability metrics into risk pricing models. Companies that demonstrate transparent, verifiable progress in operational energy efficiency and climate risk mitigation benefit from expanded access to green bond markets and lower debt pricing.

Action Steps for Accounting Leadership
1. Implement Double Materiality Frameworks: Conduct comprehensive assessments to identify material financial and operational sustainability metrics.
2. Build Auditable Non-Financial Data Pipelines: Automate ESG data collection within core accounting software to ensure data integrity.
3. Align Sustainability with Annual Financial Filings: Prepare non-financial disclosures concurrently with financial statements to satisfy regulatory audit expectations.

Accounting

Modernizing Internal Controls: Machine Learning and Continuous Monitoring in Auditing

Published

2 weeks ago

August 5, 2026

Business Finance News

Internal audit departments and corporate risk managers are modernizing internal control frameworks by shifting from periodic sampling techniques to continuous monitoring and machine learning analytics. As operational data volumes increase across enterprise organizations, automated control testing ensures financial integrity, prevents corporate fraud, and streamlines annual audit engagements.

The Limitation of Periodic Audit Sampling
Historically, internal and external auditors evaluated internal controls by reviewing random samples of financial transactions—often analyzing less than five percent of total ledger entries. In complex enterprise environments, periodic sampling methods carry inherent risks of overlooking localized financial misstatements, unauthorized disbursements, or operational control breakdowns.

In 2026, progressive internal audit functions are utilizing automated continuous monitoring platforms that evaluate one hundred percent of financial transactions in real time. Continuous control auditing systems continuously monitor general ledger entries, procurement approvals, and expense reimbursements across all operating subsidiaries.

AI-Powered Fraud Detection and Anomaly Identification
Machine learning models trained on historical corporate financial data excel at identifying subtle transactional anomalies that indicate potential fraud or operational error. Automated systems instantly flag duplicate invoice payments, unapproved vendor creation, unusual journal entry timing, and unauthorized override of authority thresholds.

When an anomaly is detected, the automated auditing platform generates an instant risk alert, allowing internal audit teams to investigate root causes immediately. Early detection prevents minor operational errors from escalating into material weaknesses in financial reporting.

Streamlining External Audit Preparation
Continuous internal control monitoring delivers significant benefits during annual external financial audits. External audit firms can review continuous audit logs and automated control testing documentation, reducing the time required for manual field testing.

This integrated approach lowers overall audit compliance fees, reduces administrative burdens on corporate accounting staff, and provides senior management and audit committees with real-time visibility into the organization’s overall risk profile.

Core Implementation Guidelines
1. Transition to 100% Data Testing: Replace legacy sampling methods with automated continuous audit monitoring systems.
2. Deploy Anomaly Detection Algorithms: Implement machine learning models to identify unauthorized transactions and operational control overrides.
3. Align Internal and External Audit Workflows: Coordinate continuous control testing protocols with external auditors to optimize annual compliance cycles.