Mark Walter’s decision to sell the Los Angeles Lakers to Joshua Kushner and Bob Iger for a reported $12.5 billion was a surprising development on Tuesday, and the details of when the transaction closes could mean hundreds of millions of dollars in tax payments either incurred or avoided.

At issue are long-term capital gains taxes, which the federal government imposes on profits from the sale of a capital asset. A sports franchise is one such asset, and the taxable profit is based on the difference between the sale price and, usually, the purchase price.

Whether the tax percentage is 23.9% or 40.9% for Walter’s projected profit of about $2.5 billion hinges on whether he, the asset holder, keeps the Lakers for more than one year. The lower percentage applies to assets held for more than one year, as the base rate is 20% but high earners like Walter also face a net investment income tax that rises the total tax to 23.9%. The underlying policy of long-term capital gains tax breaks is that they give asset holders a tax incentive to keep their assets, which encourages long-term investment.

If an asset holder instead wants to flip an asset by holding it for less than a year, the logic is that the holder should pay the ordinary income tax rate, which is 37% for taxable income over $640,600 (or over $768,700 for married couples). The income tax percentage climbs to 40.9% when including the net investment income tax.

In either scenario, applicable state income taxes also apply.

Back to Walter. In June 2025, he and the Buss family reached a deal under which he would buy the team for about $10 billion. An NBA team cannot be sold without a review by the league, which studies the financial records and ensures owners are financially capable of meeting their obligations, and a vote of approval by the league’s board of governors. For Walter, that approval occurred at the end of last October, at which point he became the controlling owner.

It’s not yet clear when the sale to Kushner and Iger will be voted on by the NBA’s board of governors, but according to tax calculations by Robert Raiola CPA, Walter could save in the ballpark of $425 million in taxes if it occurs after the one-year anniversary of him becoming controlling owner. That’s because if the 23.9% long-term capital gains tax is applied, and assuming California income taxes (13.3%) apply, he would pay roughly $930 million in taxes on the approximate $2.5 billion profit. In contrast, if 40.9% were applied, along with California taxes, he’d pay about $1.36 billion.

Raiola, the director of sports and entertainment group at PKF O’Connor Davies, cautions that the actual transaction is much more complicated than his calculations suggest. He points out there are assorted deductions and expenses that could complicate the numbers, as could residency questions, with Walter reportedly living in Chicago. Raiola further notes that actual dollar figures and media-reported dollar figures, which are often based on leaks to journalists, can end up quite different.

Another complexity, as Sportico has examined, is that Walter’s businesses (not his sports teams, the Lakers and the Los Angeles Dodgers) are subject to an ongoing federal investigation, which could lead Walter, Kushner, Iger and the NBA to explore the need for indemnification and other provisions of economic consequence if the legal issues expand to his teams.

But the larger point is clear: Walter would save a substantial amount of money if the transaction does not close for at least a few more months.