TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Tuesday, September 6, 2016

Rumsfeld Sides With McGonagall Rather Than Snape On Taxes

MRS

Following up on this morning's TaxProf Blog op-ed:   McGonagall Replies to Snape on Taxes: 'Be Proud Of The Tax Law You Have, Rather Than The One You Wish You Had', by Alice G. Abreu (Temple):

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September 6, 2016 in Celebrity Tax Lore, Tax | Permalink | Comments (0)

Abreu:  McGonagall Replies to Snape on Taxes—'Be Proud Of The Tax Law You Have, Rather Than The One You Wish You Had'

McGonagalTaxProf Blog op-ed:  McGonagall Replies to Snape on Taxes, by Alice G. Abreu (Temple):

Because Professor Minerva McGonagall is my favorite member of the Hogwarts faculty, particularly as played by the inimitable Dame Maggie Smith, and because she and Severus Snape led rival houses, here’s how I think she would reply to Adam Chodorow’s reimagined Snape, who as a TaxProf warns his students on the first day of class that because there is “little foolish argument by analogy here, many of you will hardly believe this is law.”

Humph . . . It’s high time you learned to be proud of the tax law you’ve got, rather than the one you think you ought to have.

Our rival houses are the House of Tax Exceptionalism and the House of Tax as Everylaw. Snape as a TaxProf may wish that the tax law were exceptional, different from other fields of law in such fundamental ways that it is perhaps not law at all, but that is not the tax law we actually have.

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September 6, 2016 in Celebrity Tax Lore, Legal Education, Tax | Permalink | Comments (0)

Thursday, September 1, 2016

Chodorow:  Snape On Taxes

SnapeTaxProf Blog op-ed:  Snape on Taxes, by Adam Chodorow (Arizona State):

Every fall, as I prepare to teach again after a 3-month hiatus, I am reminded of a scene from the first Harry Potter book. The students, some bright-eyed, others fearful, file into Professor Snape’s dungeon classroom for their first Potions class. Glaring out at his students, he introduces them to the subject he loves, but which he fears they will barely comprehend. The passage reads as follows:

You are here to learn the subtle science and exact art of potion-making,” he began. He spoke in barely more than a whisper, but they caught every word – like Professor McGonagall, Snape had the gift of keeping a class silent without effort. “As there is little foolish wand-waving here, many of you will hardly believe this is magic. I don’t expect you will really understand the beauty of the softly simmering cauldron with its shimmering fumes, the delicate power of liquids that creep through human veins, bewitching the mind, ensnaring the senses…I can teach you how to bottle fame, brew glory, even stopper death – if you aren’t as big a bunch of dunderheads as I usually have to teach.

What if Snape taught tax? Many of our students would likely equate the two subjects. Regardless, with apologies to J.K. Rowling, here’s what I imagine he would say:

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September 1, 2016 in Celebrity Tax Lore, Legal Education, Tax, Teaching | Permalink | Comments (1)

Thursday, August 18, 2016

'Byzantine Tax Tactics' May Shield Gawker's Assets From Hulk Hogan's $140 Million Judgment

Fortune, Can Tech’s Tattle Tycoon Trump Thiel?:

A Fortune investigation into Gawker Media’s finances reveals that though [founder Nick] Denton is down, he is not out. As the company’s websites assailed tech giants like Alphabet, Apple, and Facebook for byzantine schemes meant to reduce their tax burden, Gawker Media quietly played the same game. Our investigation reveals that Denton is as much a creature of the tech industry as he is a critic—and that Gawker’s slippery but legal tactics may, in the end, help Denton survive Thiel’s crusade with funds to spare.

Gawker

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August 18, 2016 in Celebrity Tax Lore, Tax | Permalink | Comments (0)

Thursday, July 21, 2016

NY AG Continues Crackdown On Sales Tax Abuse In Art World With Gagosian Gallery $4.3 Million Settlement

GagosianFollowing up on my previous posts (links below):  Press Release, A.G. Schneiderman Announces $4.28 Million Settlement With International Art Dealer Gagosian Gallery For Failure To Collect And Remit New York Sales Tax:

Attorney General Eric T. Schneiderman announced today a $4.28 million settlement with international art dealer Gagosian Gallery following an investigation into sales tax collection practices. Gagosian Gallery is a leading dealer of contemporary art, with galleries in New York City, Beverly Hills, San Francisco, London, Paris, Geneva, Rome, Athens and Hong Kong. Its owner, Laurence Gagosian, is a prominent figure in the contemporary art scene, and it is estimated to sell over one billion dollars of art annually. ...

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July 21, 2016 in Celebrity Tax Lore, Tax | Permalink | Comments (2)

Monday, July 11, 2016

Widow Of Indiana Pacers Owner Plays Hardball With IRS, Goes On Offense In Defending Against Subpoenas In $21 Million Gift Tax Case

PacersIndianapolis Business Journal, Pacers’ Legal Tenacity on Display in IRS Fight:

The legal fallout stemming from Melvin Simon’s decision to unload his half of the Indiana Pacers to his brother Herb just a few months before his September 2009 death is getting crazier by the day.

Mel’s widow, Bren Simon, got the public spectacle rolling in March 2015 when she sued the IRS in an effort to overturn the agency’s determination that the terms of the deal were so tilted in Herb’s favor that Mel essentially gave him an $83 million gift.

That conclusion left Bren with a $21 million gift-tax bill, which she paid under protest but hopes to get refunded by winning the suit.

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July 11, 2016 in Celebrity Tax Lore, New Cases, Tax | Permalink | Comments (0)

Saturday, July 2, 2016

Did Trump Violate IRS Rules By Using His Foundation's Money To Purchase Tebow-Signed Helmet (Now Worth $415) For $12,000?

Trump 2Washington Post, Donald Trump Used Money Donated for Charity to Buy Himself a Tim Tebow-Signed Football Helmet:

Did Donald Trump violate IRS rules, by using a charity's money to buy himself a signed football helmet?

Four years ago, at a charity fundraiser in Palm Beach, Donald Trump got into a bidding war at the evening's live auction. The items up for sale: A Denver Broncos helmet, autographed by then-star quarterback Tim Tebow, and a Tebow jersey.

Trump won, eventually, with a bid of $12,000. Afterward, he posed with the helmet. ... But Trump didn't actually pay with his own money. Instead, the Susan G. Komen organization — the breast-cancer nonprofit that hosted the party — got a $12,000 payment from another nonprofit, the Donald J. Trump Foundation.

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July 2, 2016 in Celebrity Tax Lore, Tax | Permalink | Comments (4)

Friday, July 1, 2016

The Influence Of State Taxes On NBA Free Agency

DurantNBA free agency kicked off at midnight.  How important are state tax considerations to players in choosing which team to join?  Kevin Durant reportedly is courting six suitors, two of whom are in states without an income tax: Miami and San Antonio (the others are Boston, Golden State, Los Angeles (Clippers) and Oklahoma City.)  Given his recent tax troubles, Durant may be particularly sensitive to tax considerations in making his free agency decision.  See Slam Online, The Influence of State Taxes on NBA Free Agency:

Modern athletes seem to be more financially literate and are aware of the so-called “Jock Tax” and state taxes. As such, more athletes are signing with teams that are located in states that don’t tax income, like the Miami Heat, the Houston Rockets and San Antonio Spurs.

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July 1, 2016 in Celebrity Tax Lore, Tax | Permalink | Comments (4)

Wednesday, June 29, 2016

Floyd 'Money' Mayweather Sends Form 1099 To Strip Club After Making It Rain $20,000

FloydLarry Brown Sports, Floyd Mayweather Sends Strip Club $20,000 Tax Bill After Making It Rain:

Floyd Mayweather Jr. made it rain so hard at a Las Vegas strip club a couple years back that he thinks he deserves a tax break for it.

Tax documents obtained by the Daily Mail show that Mayweather’s company, Mayweather Promotions LLC, has sent Larry Flint’s Hustler Club a 1099 IRS form for more than $20,000 he spent on strippers on May 25, 2014. Apparently The Money Team believes the Hustler Club is responsible for paying taxes on the $15,000 in singles and additional $5,000 cash Floyd and his crew spent that night.

Not surprisingly, club owner Jason Mohney is furious. He says the Hustler Club didn’t receive a dime of the $20,323.18 and that it all went to the dancers, who are independent contractors.

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June 29, 2016 in Celebrity Tax Lore, Tax | Permalink | Comments (2)

WSJ:  Judge Hands Entrepreneur Sam Wyly $1.1 Billion Tax Bill

WylyWall Street Journal, Judge Hands Entrepreneur Sam Wyly a $1.1 Billion Tax Bill:

A federal judge has ordered Texas entrepreneur Sam Wyly to pay $1.1 billion in taxes and penalties for committing tax fraud using offshore accounts, even though the former billionaire’s net worth has fallen to a fraction of that amount.

The payment demand from Judge Barbara Houser on Monday was made for federal taxes due as far back as 1992. In a court opinion filed last month, she admitted that the money “may now be more difficult for the government to collect given the passage of time and the dissipation of Sam’s wealth.”

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June 29, 2016 in Celebrity Tax Lore, Tax | Permalink | Comments (2)

Monday, June 27, 2016

NY Times:  A Noah’s Ark in Kentucky, Dinosaurs Included — But No Taxes

ArkNew York Times: A Noah’s Ark in Kentucky, Dinosaurs Included, by Laurie Goodstein:

In the beginning, Ken Ham made the Creation Museum in northern Kentucky. And he saw that it was good at spreading his belief that the Bible is a book of history, the universe is only 6,000 years old, and evolution is wrong and is leading to our moral downfall.

And Mr. Ham said, let us build a gargantuan Noah’s ark only 45 minutes away to draw millions more visitors. And let it be constructed by Amish woodworkers, and financed with donations, junk bonds and tax rebates from the state of Kentucky. And let it hold an animatronic Noah and lifelike models of some of the creatures that came on board two-by-two, such as bears, short-necked giraffes — and juvenile Tyrannosaurus rexes.

And it was so.

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June 27, 2016 in Celebrity Tax Lore, Tax | Permalink | Comments (3)

Monday, June 13, 2016

Former Qwest CEO Nacchio Denied Tax Deduction For $45 Million Forfeiture Of Insider Trading Profits

Insider TradingNacchio v. United States, Nos. 2015-5114 & 2015-5115 (Fed. Cir. June 10, 2016):

This is a tax case arising out of a criminal conviction for insider trading. Joseph P. Nacchio and Anne M. Esker (“Nacchio”) filed this action in the Court of Federal Claims seeking an income tax credit of $17,974,832 for taxes paid on trading profits of $44,632,464.38, which Nacchio was later ordered to forfeit to the United States following his conviction for insider trading with respect to those profits. The government opposed Nacchio’s request, contending that his forfeiture payment was a nondeductible penalty or fine and that he was estopped from seeking tax relief because of his criminal conviction. The parties filed cross-motions for summary judgment.

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June 13, 2016 in Celebrity Tax Lore, New Cases, Tax | Permalink | Comments (0)

Sunday, June 12, 2016

The Story Of Tonight:  With Billion-Dollar Hamilton Poised To Sweep Tony Awards, Broadway Pushes For Tax Break Extension

Hamilton 2Bloomberg, As ‘Hamilton’ Enriches Backers, Broadway Wants Tax Break Extended:

Alexander Hamilton introduced the idea of federal taxes. Broadway producers enjoying a record season buoyed by his namesake musical are lobbying Congress to limit what they owe.

The industry, which will celebrate its success tonight at the Tony Awards, is fighting to keep a provision that allows live-theater backers deductions in a show’s first year. That means they’d pay tax on income only after turning a profit. The provision passed in 2015, yet needs to be extended by Congress this year to survive.

In an industry where four of five performances close without recouping startup costs, producers say such a sweetener will keep the hits coming. While the provision was tacked onto a list of tax breaks last year at the behest of Sen. Chuck Schumer, D-N.Y., there’s no guarantee it will be continued, producers and their lobbyists say. Some lawmakers don’t like the idea. Nor do advocates of tax cuts, who say such breaks make it more difficult to reduce the burden on everyone else. ...

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June 12, 2016 in Celebrity Tax Lore, Tax | Permalink | Comments (1)

Saturday, June 11, 2016

Taxes Could Wipe Out Half Of Prince's $250 Million Estate

Following up on my previous posts (links below) on the estate planning aspects of Prince's death: People Magazine, Taxes Could Wipe Out Half of Prince's $250 Million Estate and Force Early Sale of His Unreleased Songs, Trustee Says:

Prince's estate is getting hit with a hefty tax bill that could end up taking half of his estimated $250 million fortune – and force the early sale of some of the vast troves of unreleased music that the Purple One had locked up in his vault, the trustee for the estate revealed.

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June 11, 2016 in Celebrity Tax Lore, Tax | Permalink | Comments (1)

Monday, June 6, 2016

The Tax Consequences Of John Oliver's Forgiveness Of $15 Million Of Medical Debt

Washington Post, John Oliver Just Made Talk Show History by Forgiving Nearly $15 million Worth of Debt:

John Oliver is known for demystifying complicated issues to get his “Last Week Tonight” audience riled up. He’s explained major problems with credit reports and the bizarrely undemocratic side of primaries and caucuses. In that way, last night’s episode devoted to debt buyers wasn’t all that different. He started out, in his entertainingly enraged way, by explaining how banks sell debt to other business for pennies on the dollar. Those companies have little knowledge of those owing money, but they can be terrifyingly predatory, taking advantage of consumers’ fear of legal action. Some of these debts are erroneous; some are “zombie debts” that have already been paid. And yet, debt collectors will persist, even employing dirty tactics to get cash.

But Oliver did more than educate last night. He explained to his viewers that he undertook the surprisingly easy task of starting a debt buying company, Central Asset Recovery Professional, Inc. — “or CARP, for the bottom-feeding fish,” he explained. No sooner had he set up a CARP web site, but another debt buyer was offering to sell Oliver nearly $15 million worth of medical debt for less than $60,000.

So CARP bought the debt of nearly 9,000 people — just so Oliver could forgive it. According to the host, this is the largest one-time giveaway ever on television, beating out Oprah Winfrey’s famous “you get a car! You get a car!” episode, which cost that show $8 million.

(Click on YouTube button on bottom right to view video directly on YouTube to avoid interruption caused by blog's refresh rate. The most relevant discussion begins at 17:15.)

What are the tax consequences?

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June 6, 2016 in Celebrity Tax Lore, Tax | Permalink | Comments (3)

Sunday, May 29, 2016

How Will I Know?  IRS Claims Whitney Houston's Estate Undervalued Her Right Of Publicity By $11.5 Million

WhitneyFollowing up on my previous posts (links below) on the IRS's battle with the estate of Michael Jackson over the value of the singer's publicity rights:  Hollywood Reporter, Whitney Houston Estate Challenges $11 Million Tax Bill:

The heirs of late pop star Whitney Houston are now in Tax Court over what the Internal Revenue Service claims is owed in estate taxes.

In a May 23 petition, now sealed and first reported by Bloomberg, the Whitney Houston estate objected to the determination that $22.6 million has been underreported, which the IRS claims means that more than $11 million is owed, including $3 million in penalties.

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May 29, 2016 in Celebrity Tax Lore, Tax | Permalink | Comments (0)

Wednesday, May 11, 2016

Winston Churchill:  'Serial Tax Avoider'

ChurchillThe Telegraph, Churchill a 'Serial Tax Avoider':

Sir Winston Churchill was a serial tax avoider who exploited loopholes and faked his own retirement in collusion with the chairman of Inland Revenue, his biographer has claimed.

David Lough, a historian and author, said Churchill had learned to use Inland Revenue as a "beast who can be tamed and bent" after finding himself in financial difficulties.

Not only did the politician pretend to retire in order to halve his tax bill, the author claimed, he persuaded the Revenue's young chairman to help him figure out a way to save his earnings for himself. ...

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May 11, 2016 in Celebrity Tax Lore, Tax | Permalink | Comments (1)

Monday, May 9, 2016

WSJ:  What Is Prince’s Legacy Worth? The Tax Man Wants To Know.

DovesFollowing up on my previous post, Prince Died Without A Will, According To Court Documents:  Wall Street Journal, What Is Prince’s Legacy Worth? The Tax Man Wants to Know:

After the doves cry, there’s IRS Form 706.

Estate-tax attorneys for Prince, who died [April 21], must attempt to put a precise financial value on his name, image and likeness.

That Prince-ness could make him one of America’s top-earning deceased celebrities, and it may be one of his estate’s largest assets—subject to a 40% federal tax.

The Internal Revenue Service is used to putting price tags on tradeable assets and is well-trained in taking existing revenue streams and capitalizing them into a value. It is much trickier to divine the worth of a unique niche business—marketing Prince’s legacy—that doesn’t really exist yet.

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May 9, 2016 in Celebrity Tax Lore, Tax | Permalink | Comments (0)

Wednesday, May 4, 2016

NY Times:  AG Dings Developer Aby Rosen For $7 Million In Unpaid Taxes On Art

HurstFollowing up on my previous posts:

New York Times, Developer Aby Rosen to Pay $7 Million in Suit Over Unpaid Taxes on Art:

Aby J. Rosen, the Manhattan real estate developer and art collector, is well known for exhibiting works from his collection at the landmark Seagram Building and at Lever House, both on Park Avenue, as well as at 530 Park Avenue, a 19-story residential condominium. He also has five pieces by Picasso in his Manhattan home, and a controversial, 33-foot-tall bronze sculpture of a pregnant woman with an exposed fetus on the grounds of his estate in Old Westbury, on Long Island.

That $2.5 million, 13-ton sculpture by Damien Hirst [right] is one of 200 artworks that have put Mr. Rosen at the center of another controversy — this one involving unpaid taxes.

The New York attorney general, Eric T. Schneiderman, announced a $7 million settlement with Mr. Rosen on Tuesday for failing to pay taxes on $80 million in artwork that he had bought or commissioned since 2002.

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May 4, 2016 in Celebrity Tax Lore, Tax | Permalink | Comments (1)

Monday, May 2, 2016

LeBron James Pays All Of His Social Security Taxes Before Halftime Of His First Game

Sunday, May 1, 2016

How To Win $17M At Backgammon, Until The IRS Intervenes

IRS BackgammonThe Daily Beast, How To Win $17M At Backgammon, Until The IRS Intervenes:

A legendary Irish gambler took a celebrity-obsessed American private equity honcho to the cleaners, winning over $17 million from him in the course of a 72-hour backgammon session.

Had he been Irish, Alec E. Gores, who nurtures friendship with celebrities such as Sylvester Stallone, Tobey Maguire, and Ben Affleck, and was caught up in the Anthony Pellicano wire-tapping scandal after he apparently set the private dick on his wife who was having an affair with his brother, might have known better than to get into a game of chance and skill with JP McManus. ...

McManus is famous for traveling with a portable backgammon set and, sources acquainted with him tell The Daily Beast, has been known to start games with strangers on airplanes in a (usually successful) attempt to win back his airfare.

But when he sat down with Gores, who is worth $2.1 billion, in November 2012 for what has been described as a “serious backgammon match” he walked away with enough to buy not a plane ticket but a private jet—his winnings were a stunning $17.4 million.

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May 1, 2016 in Celebrity Tax Lore, IRS News, Tax | Permalink | Comments (1)

Tuesday, April 26, 2016

Prince Died Without A Will, According To Court Documents

PrinceNew York Times, Prince Died Without a Will, According to Court Documents:

Prince died without a will, according to court documents filed by his sister, which may cause complications for his financial estate and musical legacy.

In probate documents filed on Tuesday with the court in Carver County, Minn., Tyka Nelson, 55, Prince’s sister, said that her brother died without a spouse, children or surviving parents, and that “I do not know of the existence of a will.” ...

In addition to Ms. Nelson, the document lists five half-siblings of Prince as interested parties: his half-brothers John Nelson, Alfred Jackson and Omar Baker, and his half-sisters Norrine and Sharon Nelson. According to Minnesota law, surviving half-siblings are treated the same as full siblings. ..

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April 26, 2016 in Celebrity Tax Lore, IRS News, Tax | Permalink | Comments (0)

Monday, April 25, 2016

Michael Jackson's $1 Billion Tax Court Thriller: IRS Values His Name At $434,000,000, Estate Says $2,105

ThrillerHollywood Reporter, Michael Jackson Estate Faces Billion-Dollar Tax Court Battle:

Of all the befuddling legal matters in the entertainment business, there's perhaps none that causes attorneys to scratch their heads like the battle between Michael Jackson and the Internal Revenue Service over what the late entertainer should be paying in estate taxes. In the years after his death in 2009 at age 50, Jackson has experienced a commercial rebirth thanks to the savvy executors who have managed his assets. The 2009 documentary This Is It grossed $261 million, a Cirque du Soleil tribute show packs in fans, and there have been albums, video games and other lucrative memorials. Now the IRS wants its share, claiming the value of Jackson's name and image upon death amounted to more than $434 million. The estate's own valuation? Just $2,105.

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April 25, 2016 in Celebrity Tax Lore | Permalink | Comments (5)

Sunday, February 28, 2016

A Taxing Oscars:  $232,000 Swag Bags (40% Increase Over Last Year's), Tax Incentives For Best Picture Nominees

Sunday, February 7, 2016

The Big Winner In Today's Super Bowl: The California Tax Man

SuperBowlForbes, California Taxes Will Eat Up All Of Cam Newton's Super Bowl Earnings:

Remember when Peyton Manning paid New Jersey nearly $47,000 in taxes two years ago on his Super Bowl earnings of $46,000? Manning has nothing on the state taxes facing Carolina Panthers quarterback Cam Newton for Super Bowl 50 in Santa Clara, Calif. Newton is looking at a tax bill more than twice as much, which will swallow up his entire Super Bowl paycheck, win or lose, thanks to California’s tops-in-the-nation tax rate of 13.3%. ...

If the Panthers win the Super Bowl, Newton will earn another $102,000 in playoff bonuses, but if they lose he will only net another $51,000. ... Win on Sunday, and Newton will pay California a total of $159,560 in taxes in 2016. Lose, and he will pay $159,200, based on an income reduction of $51,000.

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February 7, 2016 in Celebrity Tax Lore, Tax | Permalink | Comments (3)

Monday, February 1, 2016

David Bowie: A Tax Oddity

BowieNew York Post Page Six, David Bowie Leaves Iman Roughly Half of His Fortune:

David Bowie’s dying wish was to have his ashes scattered on Bali — in line with the island’s Buddhist customs — and his riches sprinkled on his wife and kids, according to his will filed Friday in Manhattan court. ...

Bowie also directed that his property and money be divided among his model wife Iman, his two children, Duncan Jones and Lexi Zahra Jones, a personal assistant and a former nanny.

The music icon was worth around $100 million when he died this month of cancer at 69, according to court papers.

Iman will receive roughly half of his fortune, plus the couple’s apartment on Lafayette Street in Manhattan. ...

By rock standards, David Bowie was a real tax oddity — because he was so savvy with his money.

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February 1, 2016 in Celebrity Tax Lore, Tax | Permalink | Comments (1)

Monday, January 18, 2016

Martin Luther King, Jr. And The IRS

In honor of Martin Luther King, Jr. Day:  Tallahassee Democrat, Dr. Martin Luther King Jr. and the IRS:

This past year, much ado was made about the so-called “IRS-Gate” and concerns that the Obama administration may have used the agency to target Tea Party and other right wing groups. ... [W]hat often is not stated during the Martin Luther King Holiday weekend is that King, early in his leadership of the Southern Christian Leadership Conference (SCLC), was routinely subjected to IRS audits of his individual accounts, SCLC accounts as well as accounts of his lawyers, first starting during the administration of President Dwight Eisenhower and continuing through the Kennedy administration. ...

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January 18, 2016 in Celebrity Tax Lore, Tax | Permalink | Comments (0)

Monday, January 4, 2016

Tax Exempt San Francisco Super Bowl Committee Raises Millions, With Little Transparency

Super BowlSan Francisco Chronicle, Tax Exempt Super Bowl Committee Raising Millions, With Little Transparency:

The Super Bowl 50 Host Committee — the organization charged with raising money to produce events around the Bay Area leading up to and including February’s big game — has already raised $50 million from leading Bay Area corporations.

It also has pledged $12 million to more than 100 Bay Area nonprofits, a major step toward its goal of being “the most philanthropic Super Bowl ever.”

But because the NFL requires its host committees to be structured as nonprofit organizations — claiming the same tax-exempt status that the National Football League enjoyed for decades — it doesn’t have to reveal its contributors or how much each donor gave.

That opacity is raising concerns in an era of “dark money,” where politicians use the tax code to hide contributions. Watchdog groups, which also question why wealthy professional sports leagues get to classify themselves as nonprofits, say any entity that’s raising and spending millions — with little transparency — needs to be monitored closely.

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January 4, 2016 in Celebrity Tax Lore, Tax | Permalink | Comments (1)

Wednesday, December 30, 2015

5th Circuit:  Texas Can Deny Tax Breaks To Films It Doesn’t Like

MacheteWall Street Journal Law Blog:  Texas Can Deny Tax Breaks to Films it Doesn’t Like, Appeals Court Rules, by Jacob Gershman:

Texas has leeway under the First Amendment to deny tax breaks to films deemed insulting to the state, a federal appeals court ruled [Machete Prooductions LLC v. Page, No. 15-50120 (5th Cir. Dec. 28, 2015)] ...

Last year the producers behind the sequel to the 2010 gory action comedy “Machete” sued Texas for denying them tax breaks under a state program that encourages film production in the state. ...

The state denied it infringed on any constitutional speech rights. And a lower court agreed in a ruling handed down earlier this year. On Monday the Louisiana-based Fifth U.S. Circuit Court of Appeals affirmed that decision.

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December 30, 2015 in Celebrity Tax Lore, New Cases, Tax | Permalink | Comments (1)

Wednesday, December 16, 2015

Tax Court:  92 Year Old Sumner Redstone Liable For Gift Tax On 1972 Gift

Hollywood Reporter, Sumner Redstone Loses to IRS in Tax Case Four Decades in the Making:

As the 92-year-old billionaire Sumner Redstone witnesses a vicious court fight over his mental condition, the U.S. Tax Court has released a decision [Redstone v. Commissioner, T.C. Memo. 2015-237 (Dec. 9, 2015)] that delves into the beginnings of his media empire, his connection to the early-1970s Watergate scandal and four decades of in-fighting in the Redstone family.

The case is extraordinary, to say the least. The core question in Redstone's dispute with the Internal Revenue Service pertains to whether his 1972 transfer of stock to his children was a taxable "gift" or not. Ultimately, the Tax Court affirms a tax deficiency of $737,625, but lets him off the hook for fraud. ...

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December 16, 2015 in Celebrity Tax Lore, New Cases, Tax | Permalink | Comments (2)

Thursday, December 10, 2015

Herzig:  Why We Should Stop Slamming Mark Zuckerberg And Priscilla Chan’s Philanthropic Plans

CZWashington Post op-ed:  Why We Should Stop Slamming Mark Zuckerberg and Priscilla Chan’s Philanthropic Plans, by David Herzig (Valparaiso):

For people who voluntarily decided to part with some $45 billion, Mark Zuckerberg and Priscilla Chan are getting absolutely skewered in the press. ... The promised donation has been questioned by both the conservative and liberal press. Both seemingly demonizing their decision to give 99 percent of their wealth to an entity engaged in charitable giving. Much of the vitriol directed toward them focuses on the preconceived notion of what charitable giving should look like. ...

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December 10, 2015 in Celebrity Tax Lore, Tax | Permalink | Comments (5)

Thursday, December 3, 2015

NY Times Debate: Mark Zuckerberg's Use Of A LLC Rather Than A Foundation For His $45 Billion Charitable Giving

NY Times Room for DebateFollowing up on yesterday's post, The Tax (And Insider Trading) Benefits Of Mark Zuckerberg's Pledge To Donate 99% Of His Facebook Shares (Worth $45 Billion) To Charity:  New York Times Room for Debate, Welcome or Wariness for Zuckerberg’s Legacy Plan?:

Facebook's founder pledged 99 percent of his stock to a corporation for charitable giving. But he'd avoid taxes on it, and he'd call the shots.

Additional press and blogosphere coverage:

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December 3, 2015 in Celebrity Tax Lore, Tax | Permalink | Comments (1)

The Tax Origins Of Star Wars

Star WarsSyd Gernstein (Bloomberg BNA), We Have Taxes to Thank For Star Wars:

Before there could be a clone war, a Skywalker losing some limbs in a light saber duel, a Death Star, a Death Star blowing up, another Skywalker losing a limb in a light saber duel and another Death Star blowing up, there was—and, believe me, the Star Wars fan in me wishes I was making this up—a tax controversy. ...

This first episode of Star Wars started with a tax dispute. The “trade federation” did not like the fact that the republic had imposed a tax on its trade routes, and protested the tax by staging a blockade, and ultimately an invasion, of the peaceful planet of Naboo.

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December 3, 2015 in Celebrity Tax Lore, Tax | Permalink | Comments (1)

Wednesday, December 2, 2015

The Tax (And Insider Trading) Benefits Of Mark Zuckerberg's Pledge To Donate 99% Of His Facebook Shares (Worth $45 Billion) To Charity

FacebookThe Daily Beast, Mark Zuckerberg’s Charity Windfall:

In a Securities and Exchange Commission filing on Tuesday, Facebook founder and chief executive officer Mark Zuckerberg announced that he would gift “substantially all of his shares of Facebook stock” to “further the mission of advancing human potential and promoting equality by means of philanthropic, public advocacy and other activities for the public good.” The vehicle for his beneficence will be the Chan Zuckerberg Initiative LLC, a charity that he controls and through which he will maintain control of Facebook for “the foreseeable future.”

Like great capitalists before him, including Bill Gates, Warren Buffett, John D. Rockefeller, and Andrew Carnegie, Zuckerberg is saving a lot of money by intending to do a lot of good. But there’s plenty in it for him.

Back in 2008, David Yermack a professor of finance at the NYU Stern School of Business, published a paper called Deductio Ad Absurdum: CEOs Donating Stock to Their Own Family Foundations. In it, Yermack questions the value of public subsidies for CEO stock gifts. He even points to such gifts as a mechanism for executives with highly appreciated stock to dispose of their holdings without running afoul of insider trading laws. It also allows those CEOs to maintain control of their companies in the future, but through their newfangled organizations.

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December 2, 2015 in Celebrity Tax Lore, Tax | Permalink | Comments (2)

Tuesday, December 1, 2015

Cris Collinsworth: 'The NFL Rulebook Is As Complicated As The Tax Code'

Codes 2Opportunity Live, Collinsworth: NFL Rule Book Is As Complicated as the IRS Tax Code:

NBC’s Sunday Night Football color commentator Cris Collinsworth expressed how complicated the National Football League’s rulebook is by comparing it to the tax code of the IRS, saying, “you just have no idea what’s in there.”

Tax Foundation, Sorry, Chris Collinsworth: The NFL Rulebook Is Nothing Like the IRC:

NFL Rulebook: 55,000 words
Internal Revenue Code: 3.9 million words. ... [M]uch of the word count is internal citations, appendices, enactment clauses, and the like, but a reasonable estimate with all this stripped away is still over 2.4 million words. Add in case law, guidance, and other supplementary material needed to actually understand the tax code and you wind up with CCH's 74,000 page Standard Federal Tax Reporter. The NFL Rulebook, including tables and diagrams, runs 79 pages.

December 1, 2015 in Celebrity Tax Lore, Tax | Permalink | Comments (2)

Wednesday, October 28, 2015

Good Tax Hunting: How Robin Williams Restricted The Use Of His Likeness For 25 Years After His Death, Saving Estate Taxes

GoodForbes, Why Robin Williams Won't Be Making Millions Beyond The Grave:

When beloved actor Robin Williams died in August 2014, he left behind a $100 million estate—and a potential fortune in image licensing. But a clause filed in a trust agreement made public this year means his likeness won’t make money for decades to come.

Williams, best-known for films such as Mrs. Doubtfire and Good Morning, Vietnam, filed a deed to put a restriction on the use of his likeness for 25 years after his death. This prevents his name, photograph, voice or signature from being used in any film, advertisement or endorsement until 2039–and limits his future earnings.

The estates of entertainers featured on our list of Top-Earning Dead Celebrities are able to charge upwards of $500,000 for the use of their image in advertisements, with rare deals climbing into the seven figures. Some, such as James Dean and Bettie Page, also earn royalties from clothing sold with their name attached. Busy cultural icons including Dean and Page tally up a number of licensing deals which inch their posthumous paydays into the many millions.

By restricting the exploitation of his right of publicity, Williams, who died by suicide aged 63, has ensured no one cannot profit from his untimely death—at least not yet. ...

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October 28, 2015 in Celebrity Tax Lore, Tax | Permalink | Comments (0)

Tuesday, October 6, 2015

BP Settlement Generates $15 Billion Tax Deduction

BP LogoFusion, The Gulf Oil Spill Settlement Lets BP Get Away With Not Paying $5.35 Billion in Taxes:

In announcing the final $20.8 billion settlement with BP over the 2010 Deepwater Horizon oil spill, Attorney General Loretta Lynch said on Monday, “BP is receiving the punishment it deserves.”

What she didn’t mention is that BP—which was found grossly negligent for the 2010 disaster, the worst offshore oil spill in U.S. history—will likely only pay about three fourths of that punishment once tax deductions are taken into account.

Just $5.5 billion of the settlement is a penalty under the Clean Water Act. The other $15.3 billion is other damages and payments that BP can treat as a cost of doing business, said Michelle Surka, an analyst with the U.S. Public Interest Research Group. That means that the oil giant can legally deduct 35% of this $15.3 billion from its taxes, for a total windfall of $5.35 billion. ...

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October 6, 2015 in Celebrity Tax Lore, Tax | Permalink | Comments (1)

Friday, September 25, 2015

Yogi Berra's Tax Wisdom

YogiForbes:  Yogi Berra's Sayings Worked Their Way Into Tax Decisions, by Peter J. Reilly:

Yogi Berra besides being a great baseball player and manager is also known as something of a common man philosopher for his sayings sometimes called Yogi-isms not all of which he actually said. As is my habit when the prominent pass, I had to check whether he had been involved in tax litigation. I didn’t find anything and my Thomson Reuters Checkpoint is pretty comprehensive and my research skills are pretty good. After all, tax blogging is 90% good research; the other three-quarters is creativity.

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September 25, 2015 in Celebrity Tax Lore, Tax | Permalink | Comments (2)

Sunday, June 7, 2015

NY Times: The Tax Consequences Of Dennis Hastert's Payments To Alleged Child Abuse Victim

HastertNew York Times:  When It’s a Crime to Withdraw Money From Your Bank, by Josh Barro:

Dennis Hastert has not been indicted on a charge of sexual abuse, nor has he been indicted on a charge of paying money he was not legally allowed to pay. The indictment of Mr. Hastert, a former House speaker, released last week, lays out two counts: taking money out of the bank the wrong way, and then lying to the F.B.I. about what he did with the money. ...

Paul Caron, a tax law professor at Pepperdine University, noted that the person who was paid money by Mr. Hastert may have owed income tax on the payments, whether they constituted a settlement, extortion or something else. Yes, even proceeds from extortion are taxable income; there was a Supreme Court case about the matter in 1952.

New York Times:  If Hastert Was Extorted, He Could Deduct Some Losses From His Taxes, by Josh Barro:

When I was researching my article about Dennis Hastert’s indictment on charges that he improperly withdrew large sums of money from a bank, one question I had was whether any tax was owed on the payments Mr. Hastert was said to have made.

For tax purposes, were the payments gifts? Fees? A settlement? Hush money? Any of these options would have tax implications — implications that could provide additional justification for the prosecution, since one of the key motivations of anti-money laundering laws is to prevent people from evading taxation by making large payments in cash.

Tax experts I spoke with agreed that the payments would constitute a settlement or extortion. In either case, the responsibility for reporting the payments would lie not with Mr. Hastert but with the payments’ recipient, identified in the indictment as “Individual A.”

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June 7, 2015 in Celebrity Tax Lore, Tax | Permalink | Comments (2)

Thursday, May 21, 2015

Brunson & Herzig: The NFL Should Not Be Able To Give Up Its Tax-Exempt Status Without Paying An Exit Tax

NFLForbes:  Penalty For Holding: Why The NFL Should Be Forced To Keep Its Tax Exemption, by Samuel Brunson (Loyola-Chicago) & David Herzig (Valparaiso):

Many people think there are too many tax-exempt entities.  Every time news breaks that there are tax-exemptions for fraternities, golf clubs, and social clubs there seems to be general outrage. So most people welcomed the National Football League’s announcement that it was giving up its tax-exempt status, seeing the announcement as the end of an unnecessary taxpayer subsidy. It turns out, though, that it is not that simple. Either the NFL was not providing a public good and should not have been granted the status in the first place, or if the NFL wants to be for profit, then the benefits of the tax exemption should be recaptured, e.g., with an exit tax.

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May 21, 2015 in Celebrity Tax Lore, Tax | Permalink | Comments (0)

Monday, May 18, 2015

U2 Hits Back At Criticism Over Tax Havens

Bono 2Sky News, U2 Hit Back At Criticism Over Tax Havens:

In an interview with Sky News, lead singer Bono insisted the band pays a fortune in tax and it was "sensible" to move some of their business to the Netherlands.

"It is just some smart people we have working for us trying to be sensible about the way we are taxed," he said.

"We pay a fortune in tax, a fortune, just so people know, and we're happy to pay a fortune in tax.

"Because you're good at philanthropy and because I am an activist people think you should be stupid in business and I don't run with that."

(Hat Tip: Mike Talbert.) Prior TaxProf Blog coverage:

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May 18, 2015 in Celebrity Tax Lore, Tax | Permalink | Comments (3)

Friday, May 1, 2015

Ohio Supreme Court Strikes Down Cleveland’s ‘Jock Tax’

Jock TaxWall Street Journal, Ohio High Court Strikes Down Cleveland’s ‘Jock Tax’:

Ohio’s highest court on Thursday struck down Cleveland’s so-called “jock tax,” ruling that the city was excessively taxing visiting professional athletes using an illegal method to calculate their bills. ...

Mr. Hillenmeyer, a former Chicago Bears linebacker who retired in 2010, played one game a year in Cleveland — over a 20-game season — between 2004 and 2006. Cleveland applied its income tax to 5% (1/20) of his earnings.

The city taxed Mr. Saturday, a former center for the Indianapolis Colts, for a single game in Cleveland in 2008. In his case, he never stepped foot in the city but missed that game due to an injury. He owed money anyway because the city’s regulation applied the tax to any game in Cleveland “in which the athlete was excused from playing because of injury or illness.”

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May 1, 2015 in Celebrity Tax Lore, Tax | Permalink | Comments (4)

Former NFL Star Plaxico Burress Shoots Himself In Foot, Drops Tax Payment Ball

BurressFormer NFL star receiver, Plaxico Burress, who famously served time in prison after accidentally shooting himself in the leg in a nightclub in 2008, has been indicted in New Jersey on one count of issuing a bad check or electronic funds transfer and one count of willful failure to pay state tax in the amount of $47,903. The charges carry maximum sentences of five years in prison and a $15,000 fine. 

May 1, 2015 in Celebrity Tax Lore, Tax | Permalink | Comments (0)

Wednesday, April 29, 2015

Why the NFL Gave Up Its Nonprofit Status: To Escape Scrutiny

NFLVox, Why the NFL Just Gave Up Its Nonprofit Status: To Escape Scrutiny:

For years, the NFL's tax-exempt status has been the subject of scrutiny and ridicule. To many people, the fact that a league headed by a commissioner making $44 million a year was categorized as a nonprofit was absurd.

On Tuesday, Richard Rubin at Bloomberg reports, the NFL has finally decided to shed its tax-exempt status. As a result, it will pay an estimated $10 million or so per year in taxes.

But it's important to put this number in the proper context: the league's teams pull in about $9.5 billion per year, nearly a thousand times as much. And since 2000, US taxpayers have spent an estimated $3.9 billion on stadiums for these teams.

The NFL's decision to give up its tax-exempt status isn't some noble recognition of the tax burden it's unfairly been shirking. It's a calculated move to pay a relatively small fee to avoid scrutiny and preempt possible Congressional action.

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April 29, 2015 in Celebrity Tax Lore, Tax | Permalink | Comments (3)

Wednesday, April 22, 2015

Warren Buffett’s Nifty Tax Loophole

BuffettBarron's, Warren Buffett’s Nifty Tax Loophole:

Warren Buffett has backed higher individual tax rates–while ensuring that his vast wealth in Berkshire Hathaway is almost immune.

Warren Buffett is fond of saying his tax rate is lower than his secretary’s. He does not publicize his tax returns, but for the tax year 2010, he paid $6.9 million on taxable income of $39.8 million, according to partial disclosures he made in 2011.

What is astounding about those numbers is not the 17.3% tax rate, but that Buffett’s $39.8 million of taxable income is only about 0.05% of his reported net worth ($71 billion according to Forbes, which put him third on its list of the 400 wealthiest people in the world for 2015).

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April 22, 2015 in Celebrity Tax Lore, Tax | Permalink | Comments (4)

Wednesday, April 15, 2015

World Premiere of Loopholes, A Pain In The I.R.S.

Tonight is the world premiere of Loopholes, A Pain In The I.R.S. at the Hudson Mainstage Theatre in Hollywood, Calijfornia

Loopholes

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April 15, 2015 in Celebrity Tax Lore, Tax | Permalink | Comments (0)

Saturday, April 11, 2015

Obama and Biden Release Their 2014 Tax Returns

2014 Obama Tax Return

President Obama and Vice-President Biden yesterday released their 2014 tax returns. Here are charts putting the 2014 returns in context with their earlier returns:

Obama:

Year

AGI

Tax

Charitable Gifts

Gifts/AGI

2014

$477,383

$93,362

$70,712

14.8%

2013

$481,098

$98,169

$59,251

12.3%

2012

$608,611

$112,214

$150,034

24.7%

2011

$789,674

$162,074

$172,130

21.8%

2010

$1,728,096

$453,770

$245,075

14.2%

2009

$5,505,409

$1,792,414

$329,100

6.0%

2008

$2,656,902

$855,323

$172,050

6.5%

2007

$4,139,965

$1,396,772

$240,370

5.8%

2006

$983,826

$277,481

$60,307

6.1%

2005

$1,655,106

$545,614

$77,315

4.7%

2004

$207,647

$40,426

$2,500

1.2%

2003

$238,327

$51,856

$3,400

1.4%

2002

$259,394

$68,958

$1,050

0.4%

2001

$272,759

$86,072

$1,470

0.5%

2000

$240,505

$63,732

$2,350

1.0%

Biden:

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April 11, 2015 in Celebrity Tax Lore, Tax | Permalink | Comments (1)

Tuesday, March 31, 2015

Robin Williams Left Publicity Rights (Restricted For 25 Years) to Charity, Avoiding IRS Dispute Embroiling Michael Jackson's Estate

WilliamsHollywood Reporter, Robin Williams Restricted Exploitation of His Image for 25 Years After Death:

[O]ne of the more innovative aspects of Robin Williams' estate planning ... might just might become a model for other celebrities preparing for their demise. ... According to a review of the Robin Williams Trust — filed as an exhibit last Wednesday — Williams bequeathed rights to his name, signature, photograph and likeness to the Windfall Foundation, a charitable organization set up by Williams' legal reps at the law firm of Manatt, Phelps.

There are two important facets of this provision.

First, the Trust restricts exploitation of Robin Williams' right of publicity for 25 years after his death. ...

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March 31, 2015 in Celebrity Tax Lore, IRS News, Tax | Permalink | Comments (0)

Sunday, February 22, 2015

A Taxing Oscars: $160,000 Swag Bags and Tax Incentives for Best Picture Nominees

IRS, Gift Bag Questions and Answers:

Q: What are the federal income tax consequences to a person who accepts a gift bag in recognition of involvement in an awards show?
A: In general, the person has received taxable income equal to the fair market value of the bag and its contents and must report that amount on his or her federal income tax return. ...

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February 22, 2015 in Celebrity Tax Lore, Tax | Permalink | Comments (0)

Saturday, February 7, 2015

Malcolm Butler, Not Tom Brady, to Pay Income Tax on Super Bowl MVP Truck

BradyFollowing up on Thursday's post, The Tax Consequences of Tom Brady's Gift of His Super Bowl MVP Truck to Malcolm Butler:  ESPN, Malcolm Butler to Pay Taxes on Prize:

The truck that Chevrolet presented to New England Patriots quarterback Tom Brady as Super Bowl MVP will be given directly by the company to teammate Malcolm Butler instead.

Chevy spokesman Michael Albano said the truck, a loaded Colorado, will be given to the cornerback, who intercepted Russell Wilson's pass on the goal line to seal the Patriots' win in Super Bowl XLIX last Sunday. The event will take place in the Boston area Tuesday, Albano said.

If Brady received the truck himself and gave it to Butler, he would have to count its value -- which Albano said was worth roughly $35,000 -- as income and he would be taxed on it, said Robert Raiola, a CPA who specializes in sports tax management with O'Connor Davies in New Jersey. Brady also might have had to pay a gift tax. U.S. residents can give $5,430,000 worth of gifts in their lifetime before having to pay tax on what they give. It is not known how close Brady might be to that limit.

Now instead of Brady paying income taxes, Butler will have to, according to Raiola. The approximately $35,000 value will now count as income to Butler, and he will pay taxes on that.

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February 7, 2015 in Celebrity Tax Lore, Tax | Permalink | Comments (2)