Going, going, going … gone! Barry Bonds hits his 756th home run, eclipsing Hank Aaron's major league career record. Matt Murphy caught the record home-run ball during the fifth inning of the Giants game against the Washington Nationals in San Francisco on Aug. 7.

"It's an expensive catch," said John Barrie, a tax lawyer with Bryan Cave LLP in New York who was quoted in the Wall Street Journal. "Once he took possession of the ball and it was his ball, it was income to him based on its value as of yesterday."

This issue is not new. The ball that Mark McGwire hit as his 62nd home run in a season breaking the 61-run record set by Roger Marris was the subject of controversy.

The IRS initially said the ball would be subject to taxes even if the fan who caught it gave it back to McGwire. The IRS's position was met with universal ridicule.

Then IRS Commissioner Charles Rossotti recanted: "All I know is that the fan who gives back the home run ball deserves a round of applause, not a big tax bill."

Later in 1998, Mark McGwire hit his 70th home run to set what was then a single-season home-run record. The ball was sold at auction for $3 million. Hank Aaron's 755th home-run ball sold for $650,000. Commentators speculate that the ongoing federal investigation into steroid abuse may put downward pressure on the value of Bonds' ball, but even so the ball is estimated to be worth $500,000 and perhaps more. Is the $500,000 taxable income to Matt Murphy?

There are different opinions. First, there's the so-called "common sense" view that the fan who catches the historic ball shouldn't owe tax until he sells it. Maybe Congress ought to make that the law — it's not the law now.

Second, most tax professionals reluctantly concede that under current tax law, the fair market value of the ball is taxable income to the fan the instant that person catches the ball because it's "accession to wealth."

There is a line of cases and rulings establishing that a person who finds a "treasure trove" owes tax on it right away. Similarly, if you are on a TV game show and win a car, or buy a ticket and win the lottery, your prize is taxable income the moment you receive it.

How can we forget Richard Hatch, the original "Survivor" winner who is now serving 5 years in prison for tax evasion. He didn't report his winnings of over $1 million from the reality show. As they say in law school, "Everything is income unless it is specifically exempted, excluded or deducted."

A third point of view is that the ball was a gift. Since gifts are excluded from income, that would solve Matt Murphy's income tax problem, but what about the gift tax. If it's a gift, who gave it?

Did the ball belong to Bonds or the home team, and, thus, the team owners? Gifts with a value greater than $12,000 are taxable and either use up the donor's $1 million exemption or incur a gift tax to be paid.

How much tax are we talking about?

If the ball is worth $500,000, Matt Murphy has $500,000 of ordinary income and is automatically in the highest tax bracket. If the whole $500,000 is taxed at 35 percent (the current top bracket), he would owe about $175,000 in federal income tax for 2007.

If he sells that ball, his cost basis for the ball would be $500,000, the amount he paid income tax on. If he sells that ball for $600,000, he has a gain of $100,000. If he held it for more than 1 year, this could be long-term capital gain.

But would it be taxed at the 15-percent maximum capital gain rate or the 28 percent rate for collectibles held for more than one year?

Sports memorabilia is likely to be characterized as collectible — so there goes another $28,000. Beware of Catch 756.

E-mail: Patti@spencerlawfirm.com