LeBron James, Kevin Love, and the Cleveland Cavaliers have purchased the Miami HEAT’s tax-exempt luxury tax exemption through a “mutual agreement,” according to the NBA.
The Cavs purchased the luxury tax-exemption on the first day of free agency, according to a league source.
James’ Miami Heat had previously used its exemption for the entire 2014-15 season and waived its tax liability.
“In a mutual agreement, both teams agreed to a payment that will be made at the conclusion of the 2016-17 NBA season,” the league said in a statement.
“The amount paid by both teams was determined on the basis of a percentage of the total salary cap that was not paid to the Heat prior to the trade.
The Heat and Cavaliers agreed to pay $50 million over four years, while the Cavs agreed to $40 million over three years.”
The Cavs have been active in the tax-free luxury tax market for years, signing former Miami Heat star Chris Bosh, who became an unrestricted free agent after the trade deadline in 2018.
The Cavaliers also used a tax-tax loophole last season, acquiring a player and a first-round pick for Kevin Love.
The Cavaliers also acquired a second-round selection in the 2019 NBA Draft for James.
The Heat’s tax exemption has been a controversial issue throughout free agency this season, and many fans are now demanding the league use a new “transparency” rule to enforce the tax.
The league said last month it plans to use the rule to crack down on tax-related transactions.