For Odell Beckham Junior (OBJ), the NFL star, his decision to accept his salary in cryptocurrency turned out to be a bad one. He was to be paid $750,000. He agreed to take this salary in Bitcoins. However, soon after the deal was signed, the crypto market crashed. As a result of the crash, OBJ ended up receiving only 61% of the actual salary that he would receive had he accepted the salary in a conventional way.
OBJ’s case has turned the spotlight on the tax complications that could arise from receiving salaries in crypto payments. The same is true for crypto investors who plan to receive their yield in crypto. The applicable tax is calculated when they receive the payment. The worth when they file their tax return is not applicable.
OBJ had entered into a deal with LA Rams in Nov 2021. The contract was for one year. OBJ took to Twitter to announce that he would receive his entire salary in BTC.
OBJ was probably prompted to this course of action because, at the time, BTC’s value was at its peak of $69,044. However, soon after the contract was signed, BTC experienced a 46% fall to settle at $36,972. The net worth of his salary is now only $413,000 against the original $750,000. Analysts now opine that OBJ’s decision to accept his entire salary in BTC was misguided.
Once his net salary is taxed – federal and state- at 50.3%, OBJ will end up earning a paltry $35,000. The conventional way, he would have received $90,000.
Many sports stars who have been planning to accept salaries in crypto would now be forced to reconsider.