IRS COULD TAKE BITE OUT OF RECORD-SETTING BALL.

Byline: H. Josef Hebert Associated Press 

If some fan snags the historic 62nd home run ball, the Internal Revenue Service will be taking note.

With Mark McGwire on the verge of breaking Roger Maris' home run record, fans have been scrambling to get their hands on a piece of history.

They may want to think twice before giving the ball back to the slugger.

According to the IRS, if a fan returns the ball to McGwire, the fan may be asked to pay a federal gift tax if the historic ball is determined to be valued at more than $625,000 - even if the fan doesn't get any money for it.

``The giver is responsible for paying any applicable tax on any large gift,'' IRS spokesman Steven Pyrek said Monday.

A baseball is owned by major league baseball until it leaves the field. It is then owned by the fan who comes up with it.

A gift tax applies to any property given away that is worth $10,000 or more. The person receiving the gift owes no taxes.

Under the federal tax code, the first $625,000 would be exempt because of the lifetime tax credit provided to every individual. So if the ball is deemed to be worth $1 million, the fan would owe at least 40 percent of the remaining $375,000, or $150,000, to the government.

``One of the biggest problems would be coming up with the value of whatever is given,'' Pyrek said. He could not say how much - if anything - a fan would have to pay to the IRS unless it can be determined how much the ball is worth.

On Monday, Mike Davidson, 28, came up with McGwire's 61st home run ball that tied Roger Maris' record. Davidson said he planned to return the ball to McGwire and wanted nothing in return. Some collectors have suggested the ball hit Monday could be worth $100,000.

Whoever catches McGwire's 62nd home run ball will have a number of options, all of which may have tax implications:

Keep the ball. The fan owes no tax immediately, but the ball will become part of his estate and be taxable after death.

Sell the ball. The fan would owe taxes on any profit, likely putting him in the highest tax bracket, nearly 40 percent.

Give it away. The fan would face a 40 percent gift tax. While the first $625,000 would be exempt because of a lifetime gift tax credit, the fan as a result would lose the right to use that credit as part of his future estate settlement.

The only way to avoid the IRS would be to give the ball to a charity, which in turn would not have to pay a tax if it sells the ball for a profit.