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

Mandatory ESG Reporting Standards Demand Standardized Non-Financial Audit Trails

Published

2 days ago

September 5, 2026

Business Finance News

Mandatory ESG Reporting Standards Demand Standardized Non-Financial Audit Trails

Corporate accounting departments face an expanded regulatory mandate as mandatory sustainability and Environmental, Social, and Governance (ESG) reporting frameworks take full effect internationally. Governed by the European Union’s Corporate Sustainability Reporting Directive (CSRD) and the International Sustainability Standards Board (ISSB) IFRS S1 and S2 standards, enterprise financial controllers are now legally required to track, verify, and report non-financial data with the same internal controls and auditability as traditional financial statements.

The expansion shifts ESG compliance

This regulatory expansion shifts ESG compliance from marketing departments to corporate accounting offices. Financial managers are now responsible for gathering, consolidating, and verifying carbon emissions metrics, supply chain labor conditions, water usage, and climate risk exposures across multi-tiered corporate structures. These non-financial metrics must be integrated into standardized general ledgers to withstand rigorous third-party audit assurance processes.

To comply with these rigorous reporting mandates, accounting software providers have added dedicated ESG modules designed to aggregate data from IoT sensors, utility platforms, and vendor management systems. Controllers are implementing internal control frameworks—modeled after traditional COSO frameworks—to ensure the completeness, accuracy, and consistency of sustainability disclosures, protecting organizations against greenwashing penalties and litigation risks.

The transition requires significant cross-functional collaboration between accounting teams, legal counsel, and operational directors. Accounting professionals are expanding their technical expertise beyond financial ledgers to master carbon accounting methodologies, lifecycle assessment standards, and non-financial data governance protocols, fundamentally expanding the role of the modern corporate accountant.

Why This Information Matters
Mandatory ESG disclosures require companies to treat environmental and social metrics as audited financial records. Executives, accountants, and board members must institute formal tracking and assurance processes to satisfy legal mandates, maintain investor confidence, and mitigate regulatory non-compliance risks.

Accounting

SEC’s Semiannual Reporting Proposal Faces Investor Pushback: What CFOs Need to Know

Published

2 weeks ago

August 25, 2026

Business Finance News

U.S. Securities and Exchange Commission (SEC)

A proposal from the U.S. Securities and Exchange Commission to potentially shift some public companies away from quarterly financial reporting toward a semiannual model is drawing significant pushback from investors, even as it continues moving through the regulatory process. The debate has direct implications for corporate finance teams, auditors, and the broader transparency of U.S. capital markets.

What the SEC Proposed

According to a summary published by accounting advisory firm Cohen & Co., the SEC issued a proposed rule on May 19, 2026, aimed at simplifying financial reporting requirements for many U.S. public companies. The proposal would potentially reduce the frequency of certain mandatory disclosures from quarterly to semiannual, a structural change that has not been made to core U.S. reporting requirements in decades.

The proposal follows an extended debate within U.S. policy circles, with proponents arguing that reduced reporting frequency could lower compliance costs and free up management time for longer-term strategic planning rather than quarter-to-quarter results management.

Why Investors Are Pushing Back

Comment letters submitted in response to the proposal have been extensive, and according to Cohen & Co.’s review of the public record, investors “appear to be largely opposed” to the shift, viewing frequent interim reporting as a core benefit of U.S. capital markets relative to other jurisdictions.

Accounting and law firms have taken a more measured position, generally urging any changes to remain aligned with the Financial Accounting Standards Board (FASB), whose existing disclosure requirements and guidance are built around a quarterly reporting cadence. A shift to semiannual reporting without corresponding changes to FASB guidance could create friction between SEC filing requirements and GAAP-based disclosure expectations.

Lessons From the U.K. Experience

The debate is not without precedent. The United Kingdom moved away from mandatory quarterly reporting for listed companies in 2014, returning to a semiannual disclosure requirement. According to Cohen & Co.’s analysis, that experience offers a cautionary data point: there was no measurable increase in capital expenditure or R&D investment following the change, while analyst coverage of affected companies declined as reliable interim information became less available â€” a particular risk for smaller and newly public companies that rely on analyst coverage to maintain investor visibility.

Practical Implications for Finance Teams

Beyond the debate over disclosure philosophy, the proposal carries practical complications. Many companies have debt covenants and credit agreements structured around quarterly financial delivery; a shift to semiannual reporting could require renegotiating those terms. Reduced reporting frequency would also extend the “window of market silence” between disclosures, a factor that governance and investor-relations teams would need to manage carefully to avoid information asymmetry.

Separately, and unrelated to the reporting-frequency debate, the SEC and FASB have continued finalizing more routine updates this year. New Accounting Standards Updates are taking effect for December 31, 2026, fiscal year-ends covering income tax disclosures, credit loss measurement, induced debt conversions, and stock compensation, according to Eide Bailly’s review of 2026 ASU activity. Additional guidance on paid-in-kind dividends and environmental credits is also on the near-term horizon.

What to Watch Next

The semiannual reporting proposal remains in the comment and review phase, and no final rule has been adopted as of this writing. Finance leaders should monitor the SEC’s regulatory agenda for further movement, while treating the current quarterly reporting requirement as the operative standard until any final rule is issued and an effective date is set.

Given the extent of investor opposition documented in the comment file, a full shift to mandatory semiannual reporting appears more likely to result in either a scaled-back compromise or continued study rather than swift adoption â€” though the SEC’s ultimate direction remains uncertain.

Accounting

AI-Driven Automation and Continuous Accounting Frameworks

Published

3 weeks 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.