TaxProf Blog

Moneyball Lives!

Following up on my prior post, Moneyball: The Movie:  

Sony Corp. has revived the Brad Pitt baseball film “Moneyball” after hiring “The West Wing” writer and producer Aaron Sorkin to rework the script, according to a person with knowledge of the situation.

Pitt remains committed to the movie, based on Michael Lewis’s book about Billy Beane, general manager of Major League Baseball’s Oakland A’s, the person said yesterday. The studio is looking for a director to replace Steven Soderbergh, according to the person.

Sony Pictures Entertainment stopped work on the film days before filming was scheduled to begin after Soderbergh submitted a revised script. The studio may have concluded that the changes reduced the film’s prospects, Variety reported at the time. Sony gave Soderbergh the option to offer his revised script to other studios, the person said.

Bloomberg:  Sony Hires Sorkin to Rework Brad Pitt’s Moneyball.  (Hat Tip: Steven Sholk.)

Michael Jackson's Estate May Owe $80m to IRS

Associated Press:  Death and Taxes: Big IRS Bill Looms for MJ Estate, by Stevenson Jacobs:

Creditors and heirs of Michael Jackson hoping for a cut of his musical empire will have to line up with the Internal Revenue Service, which could lay claim to $80 million or more in federal estate taxes.

To settle his tax bill, the executors of his estate may have to sell or borrow against lucrative but hard-to-value assets or ask the IRS for a multi-year extension. That could allow the estate to pay the tab over time with earnings from Jackson's share in rights to songs by the Beatles and his own music — prized properties whose value will likely make the estate's tax bill only bigger.

"The government is not going to take a Beatles record as payment. They want to be paid in cash," said Roy Kozupsky, a veteran estate lawyer in New York who has worked on behalf of several wealthy clients. ...

According to documents obtained by The Associated Press, he claimed $567.6 million in assets as of March 31, 2007, including Neverland and his share of the Sony/ATV Music Publishing catalog, which holds the rights to songs by the Beatles, Bob Dylan and other artists. The documents also show that Jackson had $331 million in debt. That would leave him with a net worth about $236 million at the time. Based on that number, Jackson's federal estate tax bill could exceed $83 million after exemptions. California, where Jackson lived at the time of his death, has no estate tax, but some states do. ...

The estate's tax dilemma highlights the cost and complexity of dying wealthy in America. Ironically, had Jackson died six months later, his estate may have had to pay no estate tax at all. Under current law, the estate tax is set to be lifted for one year starting Jan. 1, 2010. However, most experts expect Congress to overturn the one-year suspension before the end of 2009, meaning the estate tax would remain in place.

More on the Deductibility of Michael Jackson's Funeral Expenses

Following up on Thursday's post, Deductibility of Michael Jackson's Funeral Expenses, we note in the new edition of our casebook, Federal Wealth Transfer Taxation 505 (Foundation Press, 6th ed. 2009):

In Estate of Davenport v. Commissioner, 92 T.C.M. 324 (2006), the Tax Court disallowed a claimed $3,639 deduction for a “funeral luncheon”:

“[T]he record is likewise insufficient to establish the requisite necessity in connection with decedent’s funeral. From the testimony at trial, it is to be inferred that the focus of the luncheon was on recognizing and thanking third parties for their support both during decedent's life and after her passing. That represents a shift from the traditional focus of a funeral in eulogizing and laying to rest the deceased. The evidence, consisting only of broad and generalized statements about the intent of the luncheon, deprives the Court of any ability to compare what may in fact have transpired there with activities typically associated with funeral services.”

The Pope on Taxes

Pope Benedict XVI has released his encyclical, Caritas in Veritate, which focuses on the current economic crisis and includes this tax policy proposal:

One possible approach to development aid would be to apply effectively what is known as fiscal subsidiarity, allowing citizens to decide how to allocate a portion of the taxes they pay to the State. Provided it does not degenerate into the promotion of special interests, this can help to stimulate forms of welfare solidarity from below, with obvious benefits in the area of solidarity for development as well.

(Hat Tip: Ted Afield.) 

    

Tax Protesters Ed and Elaine Brown Are Convicted on All Counts

I previously blogged (here, here, here, here, and here) the case of tax protesters Ed and Elaine Brown who, after being convicted of evading $1.9 million in taxes on her dental practice, holed up in their New Hampshire mountaintop home for months, vowing to die fighting rather than surrender.  The Associated Press reports that they were convicted yesterday on weapons charges and of plotting to kill federal agents.  They face a minimum sentence of thirty years in prison.

Deductibility of Michael Jackson's Funeral Expenses

David Shulman (via the Tax Girl) asks Are Michael Jackson's Funeral Costs Deductible for Estate Tax Purposes?  His answer:

1. Everything involved with the funeral (not the public memorial but the private funeral) itself, no matter how extravagant or expensive will be allowed as a deduction.
2. Everything involved with purchasing and maintaining the burial site itself should also be deductible, even if they build a monument to him. ...
3. The costs of transporting Michael Jackson’s body from the hospital, to the funeral home, to the memorial, to wherever his final resting place may be will probably also be deductible. ...
4. Any other costs paid for by the estate for the public memorial which was not part of the funeral should not be allowed as a deduction. The public memorial, while touching, was not really part of the funeral, and the IRS would have a strong argument if they chose to disallow the deduction. However, that being said, I wouldn’t be surprised if the estate took the deduction, and the IRS allowed it. The larger estate tax battle is going to be over the valuation of Michael Jackson’s intangible intellectual property and the actual size of his liabilities.

Prior TaxProf Blog coverage of estate tax issues to be faced by Michael Jackson's estate:

• Michael as Elvis: Post-Death Exploitation of Jackson's Name Will Create "Money-Making Machine" to Pay Off Hefty Estate Tax Bill
• Michael Jackson's Looming "Estate Tax Disaster"
• Settling Michael Jackson's Estate May Be a Thriller for the Lawyers

Michael as Elvis: Post-Death Exploitation of Jackson's Name Will Create "Money-Making Machine" to Pay Off Hefty Estate Tax Bill

I previously blogged some of the estate tax issues to be faced by Michael Jackson's estate:

• Michael Jackson's Looming "Estate Tax Disaster"
• Settling Michael Jackson's Estate May Be a Thriller for the Lawyers

I also previously made available a copy of Jackson's will, which provides that all of his assets pour over to the Michael Jackson Family Trust.  Although details of the trust are not publicly available, Gerry Beyer (Texas Tech) of our sister Wills, Trusts & Estates Blog reports that the trust divides the assets:

• 40% to his mother
• 40% to his children
• 20% to charity.

CNBC reports on the estate tax issues faced by the estate in Michael Jackson: Death And Taxes, by Jane Wells:

There is a mention in Jackson's will of an insurance trust for the estate, at least through 2003. ...  Did Michael Jackson, in fact, have an insurance trust to cover the estate taxes? If so, was the policy large enough to cover what may be a huge tax bill? Sources tell me that is still being investigated.

If there isn't enough money to cover the taxes, [Randy Godshall of Sheppard Mullin] says it's "a virtual certainty" that the executors may be forced to sell assets, including the lucrative Sony/ATV song catalog, to pay the IRS cash. "The worst case scenario is that assets are subject to fire sale types of liquidity events, so that the hundreds of millions of dollars of potential value isn't realized," says Godshall, "which, of course, then leaves a lot less for the children." However, executors could file for an extension with the IRS, and even, perhaps, set up a payment plan over the next ten years to pay the taxes with new revenues coming into the estate. "The IRS would understand that you don't want to kill the golden goose by having to force (the catalog's) sale," Godshall says. "When Elvis died, his estate was also in dire straights, and the date of death value, I understand, wasn't all that substantial. But through good post-death management and commercial exploitation of his public image, it's a money making machine. I would anticipate we'll see the same thing with Mr. Jackson and his estate."

The Mailbox Rule: Tax, Baseball & Hockey

The tax version of the mailbox rule occasinally rears its head in cases (e.g., Trout v. Commissioner, 131 T.C. No. 16 (Dec. 16, 2008)) and articles (e.g.,Burgess J.W. Raby & William L. Raby, Abolishing the Mailbox Rule for Tax Documents, 105 Tax Notes 193 (Oct. 11, 2004).  One of the traumatic experiences of my youth was when the Red Sox mailed Carlton Fisk a new contract one day late, he became a free agent under the terms of the collective bargaining agreement and eventually signed with the Chicago White Sox.  From the what goes around comes around file:  press reports out of Chicago indicate that the Black Hawks may have similarly screwed up hockey's version of the Mailbox Rule with a number of its star players:

The Blackhawks had until June 29 to qualify the Hawks' restricted free agents, which would give the team the right to match any offers the players might receive from around the league. The common procedure is to send the offers to the players and their agents via courier and fax and also to fax a copy to the league. At least one player, Johnson, still had not received his offer Saturday ...

The CBA stipulates that qualifying offers must be sent via an established overnight delivery service, or certified or registered mail if overnight service is not available, to the players and their agents.

(Hat Tip: Mike Kirsch.)

Michael Jackson's Will

 

The five-page Michael Jackson will is available here and here.  For commentary on the will, see:

• ABC News
• CNN
• New York Daily News
• New York Times
• Rolling Stone
• USA Today
• Wall Street Journal

Michael Jackson's Looming "Estate Tax Disaster"

In a previous article, Estate Planning Implications of the Right of Publicity, 68 Tax Notes 95 (1995), I warned that celebrities (and their counsel) must carefully plan their estates in light of the inclusion of the value of rights of publicity for estate tax purposes under § 2033.  In the Conclusion, reprinted below the fold, I contrasted the different estate planning strategies appropriate for celebrities who zealously guard their privacy (e.g., J.D. Salinger) and for those who shamelessly exploit their celebrity (e.g., Michael Jordan).  As Tax Prof Bridget Crawford (Pace) notes, an Estate Tax Disaster Looms for Michael Jackson’s Estate if he and his counsel did not properly plan for the enormous value of his descendible right of publicity under California law.

Paul L. Caron, Estate Planning Implications of the Right of Publicity, 68 Tax Notes 95, 97 (1995):

Practitioners fortunate enough to have clients with potentially valuable descendible rights of publicity should carefully consider the estate planning implications of [Estate of Andrews v. Commissioner, 850 F. Supp. 1279 (E.D. Va. 1994). One response would be to have clients early in their careers make gifts of the right to trusts for their children or grandchildren when the value of the right is negligible . Any subsequent appreciation in the value of the right thus would escape the reach of the transfer tax. A testamentary response would be to place restrictions on the right of publicity, thereby reducing (or perhaps even eliminating) the value of the right subject to tax. A parallel approach would be to waive the decedent's interest in the right . These approaches, of course, also would reduce or eliminate the benefits to be received by the client's heirs. Another response would be to simply treat the right as any other asset to be exploited for financial gain, and to plan for the resulting estate tax burden through the use of income from the exploitation, life insurance proceeds, or otherwise.

In devising the appropriate strategy, the practitioner should, as always, carefully consider the client's wishes. For the celebrity like J.D. Salinger who has carefully protected his privacy and not exploited his name during life, failing to plan in light of Andrews would result in an estate planning disaster when the right is valued by the Service at its full exploitive value. The cash-strapped heirs would be hard pressed in this situation to respect the decedent's privacy wishes that the right of publicity is designed to protect . Proper planning for the publicity-shy celebrity may be to impose restrictions on the right of publicity to accord with his privacy interests without subjecting the heirs to an estate tax burden . In contrast, for the celebrity like Michael Jordan who has aggressively exploited his name during life, it may not make sense to impose any restrictions on the right of publicity. The best approach for such a celebrity may be to maximize the benefits to his heirs through an unfettered right of publicity, at the cost of a 55 percent estate tax bite to be paid for with the fruits of the exploitation.

Update:  Don't Mess With Taxes has more here.

Settling Michael Jackson's Estate May Be a Thriller for the Lawyers

Business Week:  Settling Michael Jackson's Estate May Be a Thriller, by Christopher Palmeri:

The King of Pop will likely leave behind one royal estate battle.

Michael Jackson, the onetime child star whose string of hit songs got people boogying from Boise to Bahrain, died suddenly on June 25 after being rushed to UCLA Medical Center in Los Angeles in a coma. The singer faced a near-constant drumbeat of legal troubles in life. He'll likely cue up plenty of them in death as well.

Although he sold hundreds of millions of records, Jackson's biggest financial hit is a 50% interest in a music publishing catalog that includes the rights to the Beatles' songs.

Jackson, 50, always stayed one beat ahead of a conga line of creditors. At every turn there seemed to be one more wealthy benefactor to bail him out.

Wall Street Journal:  Jackson Estate Likely A Tangled Affair, by Arden Dale:

Along with the hit songs and his title as the King of Pop, Michael Jackson will leave a tangled estate. Debt, a byzantine array of business ventures and a non-traditional family promise to be among the legacies of the singer, who died unexpectedly on Thursday at age 50.

Three themes will surely be prominent as the story unfolds, according to Renee Gabbard, a partner and head of the wealth management practice in the Costa Mesa, Calif. office of law firm Paul, Hastings, Janofsky & Walker LLP. They are privacy, royalties and the estate tax.

Administering an estate like Jackson's requires an almost military-style operation, with lawyers poring over reams of contracts. "You have to marshall it, and be extremely organized and logical," says Gabbard. Jackson was famously private and his lawyers are likely to try to preserve that legacy. If a California resident, the singer is likely to have left a revocable trust that can keep many details of the estate secret. Nonetheless, it's difficult to get all of the assets in a huge, complex estate into a revocable trust. Contracts, royalties, partnerships and other elements of the estate invariably get left out.

WSJ Law Blog: On Michael Jackson and the Law:

When the immediate tributes and remembrances and eulogies have run their course on the King of Pop, attention will likely turn to a handful of more mundane questions: what happens to Neverland, to his collection of curios; what, if anything, becomes of the rights to his musical legacy? All of these questions, of course, will involve lawyers. Dozens upon dozens of lawyers.

The Code and Regs Find a Home

I previously blogged Sarah Lawsky's (George Washington) photo essay on her unsuccessful effort to move the 8-volume complete CCH tax code and regs at a yard sale -- she first asked $1 for the $270.50 set, and then couldn't even give it away!  Sarah reports that they have "found a happy home–indeed, perhaps the best home imaginable. They have gone to live with Sheldon S. Cohen, a former IRS commissioner, adjunct GW Law professor, and all-around good guy."

Moneyball: The Movie

As regular readers of this blog know, I have long been intrigued by the application of Moneyball principles to law schools, beginning with my article, What Law Schools Can Learn from Billy Beane and the Oakland Athletics, 82 Tex. L. Rev. 1483 (2004), which helped spawn the Moneylaw blog.  I previously blogged the exciting news that a Moneyball movie is in the works, with Brad Pitt as Billy Beane. But Variety reported yesterday that

Columbia Pictures has dropped the ball on “Moneyball,” the Steven Soderbergh-directed Brad Pitt starrer that was supposed to begin production on Monday in Phoenix. ...

Aside from actors like Pitt and Demetri Martin, Soderbergh is using real ballplayers -- such as former A’s Scott Hatteberg and David Justice -- as actors, and he also has shot interviews with such ballplayers as Beane’s former Mets teammates Lenny Dykstra, Mookie Wilson and Darryl Strawberry. Those vignettes would be interspersed in the film.While Soderbergh is confident his take will work visually, Columbia brass had doubts on a film that costs north of $50 million. That is reasonable for a studio-funded pic that includes the discounted salary of a global star like Pitt, but baseball films traditionally don’t fare well on the global playing field.

(Hat Tip: Sarah Lawsky.)

New Details Emerge of Scientology-IRS Settlement

One of the enduring tax mysteries is the 26-year battle between the Church of Scientology and the IRS (documented here), culminating in a 1993 settlement (during Fred Goldberg's stint as Commissioner) in which the IRS agreed to grant tax exempt status to the church (Rev. Rul. 93-73, 1993-2 C.B. 75) , which in turn agreed to drop its multi-front litigation "war" against the IRS.  Yesterday's St. Petersburg Times began a three-part special report on the church, with Part 1 including details of the Scientology-IRS settlement (today's Part 2 is here):

Scientology vs. the IRS

By the late 1980s, the battle with the IRS had quieted from the wild days of break-ins and indictments. But Miscavige was no less intent on getting back the church's tax exemption, which he thought would legitimize Scientology.

The new strategy, according to Rathbun: Overwhelm the IRS. Force mistakes.

The church filed about 200 lawsuits against the IRS, seeking documents to prove IRS harassment and challenging the agency's refusal to grant tax exemptions to church entities.

Some 2,300 individual Scientologists also sued the agency, demanding tax deductions for their contributions.

"Before you knew it, these simple little cookie-cutter suits … became full-blown legal cases," Rathbun said.

Washington-based attorney William C. Walsh, who is now helping the church rebut the defectors claims, shepherded many of those cases. "We wanted to get to the bottom of what we felt was discrimination,'' he said. "And we got a lot of documents, evidence that proved it.''

"It's fair to say that when we started, there was a lot of distrust on both sides and suspicion,'' Walsh said. "We had to dispel that and prove who we were and what kind of people we were.''

Yingling teamed with Walsh, Miscavige and Rathbun on the case. She said the IRS investigation of Miscavige resulted in a file thicker than the FBI's file on Dr. Martin Luther King. "I mean it was insane,'' she said.

The church ratcheted up the pressure with a relentless campaign against the IRS.

Armed with IRS records obtained under the Freedom of Information Act, Scientology's magazine, Freedom, featured stories on alleged IRS abuses: lavish retreats on the taxpayers' dime; setting quotas on audits of individual Scientologists; targeting small businesses for audits while politically connected corporations were overlooked.

Scientologists distributed the magazine on the front steps of the IRS building in Washington.

A group called the National Coalition of IRS Whistleblowers waged its own campaign. Unbeknownst to many, it was quietly created and financed by Scientology.

It was a grinding war, with Scientology willing to spend whatever it took to best the federal agency. "I didn't even think about money,'' Rathbun said. "We did whatever we needed to do.''

They also knew the other side was hurting. A memo obtained by the church said the Scientology lawsuits had tapped the IRS's litigation budget before the year was up.

The church used other documents it got from the IRS against the agency.

In one, the Department of Justice scolded the IRS for taking indefensible positions in court cases against Scientology. The department said it feared being "sucked down" with the IRS and tarnished.

Another memo documented a conference of 20 IRS officials in the 1970s. They were trying to figure out how to respond to a judge's ruling that Scientology met the agency's definition of a religion. The IRS' solution? They talked about changing the definition.

Rathbun calls it the "Final Solution" conference, a meeting that demonstrated the IRS bias against Scientology. "We used that (memo) I don't know how many times on them," he said.

By 1991, Miscavige had grown impatient with the legal tussle. He was confident he could personally persuade the IRS to bend. That October, he and Rathbun walked into IRS headquarters in Washington and asked to meet with IRS Commissioner Fred Goldberg. They had no appointment.

Goldberg, who did not respond to interview requests for this story, did not see them that day, but he met with them a week later.

Rathbun says that contrary to rumor, no bribes were paid, no extortion used. It was round-the-clock preparation and persistence — plus thousands of lawsuits, hard-hitting magazine articles and full-page ads in USA Today criticizing the IRS.

"That was enough," Rathbun said. "You didn't need blackmail."

He and Miscavige prepped incessantly for their meeting. "I'm sitting there with three banker's boxes of documents. He (Miscavige) has this 20-page speech to deliver to these guys. And for every sentence, I've got two folders'' of backup.

Miscavige presented the argument that Scientology is a bona fide religion — then offered an olive branch.

Rathbun recalls the gist of the leader's words to the IRS:

Look, we can just turn this off. This isn't the purpose of the church. We're just trying to defend ourselves. And this is the way we defend. We aggressively defend. If we can sit down and actually deal with the merits, get to what we feel we are actually entitled to, this all could be gone.

The two sides took a break.

Rathbun remembered: "Out in the hallway, Goldberg comes up to me because he sees I'm the right-hand guy. He goes: 'Does he mean it? We can really turn it off?' ''

"And I said,'' turning his hand for effect, " 'Like a faucet.' ''

The two sides started talks. Yingling said she warned church leaders to steel themselves, counseling that they answer every question, no matter how offensive.

Agents asked some doozies: about LSD initiation rituals, whether members were shot when they got out of line and about training terrorists in Mexico. "We answered everything,'' Yingling said, crediting Miscavige for insisting the church be open, honest and cooperative.

The back and forth lasted two years and resulted in this agreement: The church paid $12.5 million. The IRS dropped its criminal investigations. All pending cases were dropped.

On Oct. 8, 1993, some 10,000 church members gathered in the Los Angeles Sports Arena to celebrate the leader's announcement: The IRS had restored the church's tax exemption, legitimizing Scientology as a church, not a for-profit operation.

"The war is over," Miscavige told the crowd. "This means everything.''

For a recent example of the continuing impact of the Scientology settlement on the administration of the tax law, see 9th Circuit: Parents Cannot Deduct Payments to Their Children's Religious Schools (12/13/08).  For additional commentary on the IRS and Scientology, see:

• Gregg Polsky, Can Treasury Overrule the Supreme Court?, 84 B.U. L. Rev. 185 (2004).
• Alison H. Eaton, Comment, Can the IRS Overrule the Supreme Court, 45 Emory L.J. 987 (1996).

(Not) Selling the Code and Regs at a Yard Sale

Check out Sarah Lawsky's (George Washington) photo essay on her unsuccessfull effort to move the 8-volume complete CCH tax code and regs at a yard sale -- she first asked $1 for the $270.50 set, and then couldn't even give it away!  (Hat Tip:  Law Librarian Blog.) 

Funding Health Care by Taxing Cialis Ads

Bloomberg News:  House Considering $37 Billion Drug Tax, Rangel Says, by Ryan J. Donmoyer:

The House is considering imposing a $37 billion tax on drugmakers by denying deductions for prescription-drug advertising, Ways and Means Committee Chairman Charles Rangel said. As lawmakers seek ways to pay for a health-care overhaul, “one thing that’s not off the table is you can pick up $37 billion knocking out the deduction for advertising” for prescription drugs, Rangel, a New York Democrat, told reporters today in Washington.

Tax.com:  Taxing Bad Commercials -- Now There's Tax Policy for You, by Christopher Bergin:

Now there’s tax policy at its best! Maybe we can have a marginal tax apply based on how annoying specific commercials are. ...

This is why tax policy is such fun to watch. In this case, Congress is desperate for money for healthcare reform. So, Congress puts a bull’s-eye on the drug companies because, apparently, large multinationals have become the target de jour. And I don’t have to look at that guy in the Lipitor commercials anymore.

You can’t make this stuff up.

Cialis - Good Times | Super Bowl Ads | SPIKE.com

Stanford Law Grad-Call Girl Lacks Resources to Satisfy Guilty Plea in Tax Evasion Case

I previously blogged (here and here) the case of 2001 Stanford Law Grad Cristina Schultz (now Cristina Warthen after her marriage to David Warthen, co-founder of the online search engine Ask Jeeves, now known as Ask.com), who pled guilty in January 2009 in California federal district court to failing to pay taxes on $133,717 she earned as a prostitute in 2003 (United States v. Warthen, No. CR-08-682). From the San Jose Mercury-News:

A Stanford law school graduate who pleaded guilty earlier this year to federal tax charges related to running an escort service is now unable to pay her full debt to the government because her estranged husband’s Internet wealth has dwindled so much he can no longer foot the bill.

A federal judge on Monday put off Cristina Warthen’s scheduled sentence in the case until she can resolve financial woes that have hit her since her plea deal was reached in January. At that time, Warthen pleaded guilty to tax evasion charges and agreed to pay at least $313,000 to the government to cover taxes on earnings from her days as an upscale prostitute who went by the name “Brazil.”

But in court papers filed last week, Warthen’s lawyers say her pending divorce from David Warthen, the co-founder of the online search engine Ask Jeeves, now known as Ask.com, has left her close to $100,000 short of being able to complete her plea deal. In court papers, Cristina Warthen’s lawyers say her estranged husband had agreed to cover $350,000 to pay for her legal troubles, including the plea amount, but has been reduced to “a mere shadow of his former financial self” because of the stock market plunge. As a result, Warthen’s lawyers told U.S. District Judge James Ware said she could get no more than about $230,000 from him in their pending divorce proceedings, leaving her well short of what she needs.

(Hat Tip: Law School Headlines.)

UCLA Body Parts Trafficker Sentenced to 10 Years for Tax Evasion

More fodder for the it always comes down to taxes file:  a former mortuary worker convicted of carving up and selling cadavers donated to the UCLA medical school was sentenced to 10 years in prison Thursday and ordered to pay more than $1.7 million. Jurors last month had found Ernest Nelson, 51, guilty of eight counts, including grand theft and tax evasion.

• Associated Press
• NBC News
• Roth & Co.
• The Tax Lawyer's Blog

Monopoly -- Income Tax Edition

Check out Monopoly: Income Tax Edition:

This is a fairly easy Monopoly game expansion to teach youngsters the principles of filing and paying income tax. It includes an income tax form on which players keep track of income and deductions, figure and pay their income tax at the end of each circuit of the board. Players may opt to hire themselves out as tax preparers and those who do not wish to file their own returns may hire and pay tax preparers to do so, the cost of which is tax deductible, of course.

I absolutely love this warning:

Please note that this is not a representation of real-life tax preparation. It is a simplified simulation meant to educate children on the basic principles of income and taxes and should not be taken as a source for tax preparation information.

(Hat Tip: Sarah Lawsky, Jim Maule.)

Judge Refuses to Revoke Marion Barry's Probation for Continued Failure to File Tax Returns After U.S. Attorney Fails to Call Any Witnesses at Hearing

I previously blogged Marion Barry Owes $277k in Back Taxes; Government Seeks Revocation of His Probation (March 30, 2009):

In a scathing pretrial memorandum, U.S. Attorney Jeffrey A. Taylor alleges that former D.C. Mayor (and current D.C. Council member) Marion Barry owes more than $277,000 in unpaid federal taxes, penalties, and interest. In addition, the memorandum alleges that Barry did not file his 2007 tax return until February 17, 2009, four months after the due date (with the automatic four-month extension), and it showed additional taxes owed of $6,512. The U.S. Attorney is seeking revocation of Barry's three-year probation on his guilty plea to failing to file his federal and D.C. tax returns for 1999-2004.

In a bizarre twist, the U.S. Attorney failed to call a single witness at the hearing, and the district court on Friday rejected the request to revoke Barry's probation.  United States v. Barry, No. 05-0556M (D.C. D.C. May 22, 2009):

Defendant advised, as context for the violations alleged by the United States Attorney and the United States Probation Office, that issues regarding his health "left [him] unable to fully focus on the task of submitting his tax returns." ...

The United States Attorney also suggested that Defendants' health concerns did not prevent him from "vacation[ing] in Jamaica [in September, 2008]," running a "successful campaign ... for re-election [in November 2008,] or "work[ing] as a member of the Council of the District of Columbia." ...

In this district, probation revocation proceedings are almost invariably initiated by the United States Probation Office. ... The only exception to this general rule has been in this action, in which ... the United States Attorney -- in the absence of a request by the United States Probation Office -- has moved to revoke this Defendant's term of probation. ... 

[A]t the April 16 hearing, the United States Attorney elected not to call a single witness in an effort to prove the new criminal conduct....

Upon consideration of the evidence offered by the United States Attorney at the hearing, the court finds that the United States Attorney failed even to atempt to demonstrate, by the facile preponderance standard, that Defendant's failure to timely file his 2007 tax returns was willful. ...

Plainly, willfulness is an element of the alleged new criminal conduct.  The United States Attorney has, without explanation, failed to even attempt to prove it.  No authority supports the proposition that the United States Attorney may allege that a probationer violated his conditions of probation by new criminal conduct and reuest a hearing on that ground, and, at the hearing, call no witnesses and maintain that he need not offer any evidence at all with respect to an element of the offenses.

A spokesman for the U.S. Attorney's office "strongly disagreed with some of the court's characterizations and findings of fact."  Barry has called for an investigation into the U.S. Attorney's conduct of the case.

• Associated Press
• Suits & Sentences
• Washington Post
• Washington Times

Teenager Who Auctioned Her Virginity for $14k May Lose Half to Tax Man

Daily Mail: Teen Who Auctioned Her Virginity for £8,000 May Lose Half... Because Prostitutes in Germany Are Taxed at 50% of Earnings:

Tax authorities in Germany are poised to claim 50% of the money that a teenage student earned for 'auctioning' her virginity because they claim it was "tantamount to prostitution."

Romanian-born Alina Percea, who is a student in Germany, was paid £8,800 [$13,827] in cash for a weekend of sex with the Italian businessman after she auctioned her virginity online. But tax officials in Berlin regard the 18-year-old's act as "nothing more than prostitution." Prostitution is legal in Germany -- but it is heavily taxed. ...

It also emerged that, because Alina earned so much in such a short time, she may even be liable for a hefty VAT bill too. VAT in Germany works out to 19%, meaning the sale of her virginity could land her with just over £3,000 in the end.

• The Sun

(Hat Tip: Gregg Benson.)

More From The Stand-Up Economist

I have previously blogged (here and here) the comedy stylings of Yoram Bauman, Ph.D., the "World's First and Only Stand Up Economist."  Yesterday, he posted his appearance at the January 2009 meeting of the American Economic Association:

SNL: The Bank Stress Tests

IRS Sues Robin Givens for $300k in Back Taxes

The IRS has sued actress Robin Givens, ex-wife of boxer Mike Tyson, for $300,000 in back taxes, interest, and penalties for eight of the twelve calendar years through 2007.  Ms Givens also has state tax difficulties, with tax liens filed against her in California, Florida, and New York.

• Forbes
• Web CPA

In unrelated news, press reports today say that Mr. Tyson reportedly threatened to kill Brad Pitt for dating Ms. Givens.

President Obama at Last Night's White House Correspondents' Dinner

Circular 230 Lament

I previously blogged the musical stylings of Tennessee Tax Lawyer Anne M. McKinney on her Ballad of Timothy Geithner, which has attracted over 1 million views on YouTube.  Here is her Circular 230 Lament:

(Hat Tip: InstaPundit.)

Nanny Tax Rap

Nanny Tax Rap from the Tax Foundation:

Andy Rooney Supports Public Disclosure of Tax Returns

On April 15, I blogged Joe Thorndike's proposal advocating public disclosure of all tax returns.  Andy Rooney came out in favor of the idea on his 60 Minutes segment on CBS:

(Hat Tip: tax.com.)

Michael Caine on British Tax Rates: "At 51%, I'm Out of Here"

From the Telegraph:

His name, as they say, is Michael Caine. And he's not a happy bunny. The 76-year-old film star has revealed in colourful terms that he has had it, and will leave Britain if taxes get any higher.

"The Government has taken tax up to 50%, and if it goes to 51 I will be back in America," he said at the weekend. "We've got 3.5 million layabouts on benefits, and I'm 76, getting up at 6am to go to work to keep them. Let's get everybody back to work so we can save a couple of billion and cut tax, not keep sticking it up."

(Hat Tip: Andy Morriss, InstaPundit.)

More on Bono's Tax Hypocrisy

I previously have blogged (see list below the fold) the flap over Bono's arranging his music business affairs to escape Irish taxes.  Here is the latest chapter:  What Bono Says and What He Does; There’s a Well-Documented Reason the Do-Gooder Can’t Put His Money Where His Mouth Is:

After playing the Obama inauguration a couple of months back, the pop star Bono flew back home to a rare barrage of hostile headlines. As you know, the global do-gooder wants us to send more of our money to Africa. So why is he sending his money to the Netherlands?

• U2 & Bono Bail Out to Avoid Irish Tax (Part 1)
• U2 & Bono Bail Out to Avoid Irish Tax (Part 2)
• Bono, Tax Avoider; The Hypocrisy of U2
• Netherlands Is Latest Tax Shelter Hot Spot
• Bono "Hurt" by Criticism of His Move From Ireland to Avoid Tax on Music Royalties

(Hat Tip: Andy Morriss.)

All She Wants to Do Is Tax

Chuck DeVore, who is running for Barbara Boxer's senate seat, posted a video on YouTube, All She Wants to Do Is Tax, a funny parody of Eagles founder Don Henley's hit song, All She Wants to Do is Dance.  CNN reports that Henley sued DeVore in federal district court in California.  (Hat Tip: Ann Murphy.)

Survivor Argentina: Richard Hatch Wants to Serve Supervised Release in Buenos Aires

Richard Hatch, the first winner of the CBS reality TV show "Survivor," has filed a petition seeking to alter the terms of his supervised release from prison where he is serving his conviction for failing to pay taxes on his $1 million prize.  United States v. Hatch, No. 06-1902 (1st Cir. 2/1/08).  Hatch is scheduled to be releasedfrom prison on October 7, 2009.  The motion requests that Hatch be allowed to serve his supervised release in Buenos Aires, Argentina or, in the alternative, be permitted to travel internationally to make money off of his Survivor fame.  The Goverment's motion opposes the request because the sentencing judge ordered that Hatch undergo mental health counseling and that he file amended returns for 2000 and 2001 and pay his back taxes:

In the event the defendant does not file amended returns pursuant to the Court’s directive, the government anticipates that it will seek revocation of the defendant’s supervised release. It will be extremely difficult, if not impossible, for the government to take these actions if the defendant is living in Argentina, or even permitted to travel internationally.

• Providence Journal

See prior TaxProf Blog coverage below the fold:

• Survivor Winner Richard Hatch Files Habeas Petition to Get Out of Jail (3/27/09)
• Survivor Winner Richard Hatch Appeals Tax Evasion Conviction to Supreme Court (6/4/08)
• Survivor Winner Richard Hatch Loses Appeal of Tax Evasion Conviction in First Circuit (2/3/08)
• Prior TaxProf Blog coverage: "Fat Naked Guy" Gets 51 Months for "Survivor" Tax Dodge (5/16/06)
• Survivor Winner Hatch Blames Tax Troubles on Show's Producers (1/21/06)
• Jury Selection Begins in Survivor Winner Richard Hatch's Tax Evasion Trial (1/11/06)
• Survivor: Tax Evasion (12/26/05)
• Survivor Winner Richard Hatch Indicted for Tax Evasion for Failing to Report $1m Income (9/9/05)
• Survivor Winner Richard Hatch Blames CBS for His Tax Woes (3/13/05)
• Survivor Winner Richard Hatch Reneges on Plea Deal with IRS (3/7/05)
• Survivor Winner Richard Hatch Cannot Survive IRS (1/19/05)

Martha Stewart's Daughter Sues CPA After Getting $1m Tax Bill

New York Post: Martha's Kid Paid $1 Mil for Tax "Goof":

Martha Stewart's daughter had her own run-in with the feds - she had to shell out almost $900,000 in back taxes and a $110,000 fine after an IRS audit, court papers show.

Alexis Stewart acknowledged being audited in a lawsuit against Michael Mirras, the CPA charges led her into filing a faulty return in 2002.

Mirras "was negligent, careless, violated his professional duties of due care and diligence to plaintiff, failed to exercise reasonable skill as an expert certified public accountant and was guilty of professional malpractice by incorrectly calculating Ms. Stewart's capital gains," the suit says. ...

Alexis Stewart's lawsuit says she sought Mirras's help in 2002, when she redeemed her interest in the "Martha Stewart Family Limited Partnership" in exchange for shares in her mom's company, Martha Stewart Omnimedia.

She sold the shares that same year, while her mom was under investigation in the insider trading case.

The suit says Mirras was supposed to determine Stewart's tax liability for the capital gains she realized from the stock sale, and he improperly computed the figure, resulting in Stewart paying much less to the taxman than she should have.

The error was caught in a 2006 IRS audit, the suit says. She had to pay $737,047 in back taxes plus $143,683 in interest. She also got slapped with a $294,818 penalty, which she was able to negotiate down to $110,557.

• Associated Press
• New York Daily News
• NJ.com

(Hat Tip: Alan E. Weiner.)

Update:  The Tax Lawyer's Blog has more here.

California Celebrity Tax Deadbeats

Today's L.A. Times:  3 Celebrities on List of California Tax Evaders:

Dionne Warwick, Burt Reynolds and Sinbad are among 250 people with the largest delinquent income tax bills, officials say. O.J. Simpson, now in prison, is taken off the list. ...

Simpson was on last year's list, with a bill of $1.5 million. The onetime football great and actor was taken off this year's list after being sentenced to at least nine years -- and possibly up to 33 years -- in prison in Nevada for his role in robbing a pair of memorabilia dealers. ...

The 2009 list includes Warwick, who owes $2.18 million, and Reynolds, who owes $225,000. ... Sinbad, listed as Sinbad Adkins, of Oak Park, Ill., owes $2.5 million. 

• Associated Press
• E! Online
• Perez Hilton
• Tax Girl

For the complete list, see here. 

Joe the Plumber Takes on the IRS

• IRSVote.com
• WebCPA

Court Allows Wesley Snipes to Leave U.S. for 5 Months Pending Appeal of Tax Conviction

Following up on my recent posts (here and here), the federal district court in Ocala, Florida has granted Wesley Snipes' motion seeking permission to travel to Nambia from April 5 to April 29 (to film the movie Gallowwalker) and to Italy from May 4 to August 15 (to film the movie Game of Death) while the appeal of his conviction on three misdemeanor tax fraud counts is pending in the Eleventh Circuit.  United States v. Snipes, No. 5:06-cr-22 (M.D. FL Mar. 31, 2009):

While it does appear that on two occasions Defendant Snipes exceeded his travel conditions as set forth in his terms and conditions of release and the Court’s July 2, 2008 Order, it is also true as pointed out in Defendant Snipes’ moving papers that he has never failed to appear at the many proceedings in this case where his presence was required. The purpose of bail is to ensure that a defendant appears when required, and it is clear, at least to date, that the current bail amount and existing terms and conditions of Defendant Snipes’ release are sufficient to ensure his appearance.

However, the United States correctly points out that there is a heightened level of concern in this case should the Court of Appeals affirm Defendant Snipes’ conviction and sentence while he is out of the country. In such a case, Defendant Snipes would have an additional incentive not to return to the United States to serve his sentence. And on the civil side, the Government would be handicapped in its pursuit of collections of Defendant Snipes’ alleged income tax deficiencies.

Accordingly, upon due consideration, Defendant Snipes’ Motion for Limited Travel for Work Obligations (Doc. 509) is GRANTED, and Defendant Snipes shall be authorized to travel to Namibia, Africa, from April 5, 2009 through April 29, 2009 and to London, England from May 4, 2009 through August 15, 2009 provided, however, that his conditions of release are hereby modified to require that Defendant Snipes fully cooperate with the Internal Revenue Service and disclose contemporaneously upon request any and all contractual and related documents concerning the business purpose of his travel, the anticipated revenue streams from the two films, the source of the revenue from these films, and the time, manner, and place Defendant Snipes, his assignee(s), if any, and any entity in which Defendant Snipes has any interest, expects to derive revenue in any form, present or future. In the event Defendant Snipes undertakes the requested travel set forth in this motion, he will be deemed to have accepted and consented to these modifications of his conditions of release without further notice or hearing. These modifications are in addition to, and do not amend or terminate any reporting requirements currently in existence and/or that may be made in the future by the Pretrial Services Officer assigned to this case.

Although the Court is granting Defendant Snipes’ current motion to travel, the Court is in no way discounting his prior violations of his conditions of release and travel restrictions. Any further violations of Defendant Snipes’ conditions of release reported to the Court by the Defendant’s supervising Pretrial Services Officer, whether such violations are deliberate, unintentional, or based on the advice of counsel, will result in the immediate issuance of a warrant of detention pending a hearing pursuant to 18 U.S.C. § 3143 and Fed. R. Crim. P. 46. The Pretrial Services Officer is directed to immediately notify the Court, in writing, of any violations of Defendant Snipes’ conditions of release, including any conditions created to accommodate the travel permitted by this Order.

• Miami Herald
• Ocala News
• Orlando Sentinel

Tax Lawyer Sings Ballad of Timothy Geithner

Tennessee Tax Lawyer Anne M. McKinney sings her Ballad of Timothy Geithner, which has attracted almost 500,000 views on YouTube:

Marion Barry Owes $277k in Back Taxes; Government Seeks Revocation of His Probation

In a scathing pretrial memorandum, U.S. Attorney Jeffrey A. Taylor alleges that former D.C. Mayor (and current D.C. Council member) Marion Barry owes more than $277,000 in unpaid federal taxes, penalties, and interest. In addition, the memorandum alleges that Barry did not file his 2007 tax return until February 17, 2009, four months after the due date (with the automatic four-month extension), and it showed additional taxes owed of $6,512.  The U.S. Attorney is seeking revocation of Barry's three-year probation on his guilty plea to failing to file his federal and D.C. tax returns for 1999-2004:

The Court’s patience should be at an end. The defendant continues to flout the standards applicable to all persons who reside in the District of Columbia, who work for a living, and who pay a portion of their income to support his salary. In addition, the defendant has wasted the time of this Court, the probation office, and the government by his recalcitrance to file the tax returns required of every citizen. By adding yet an eighth year to his record of willfully failing to file tax returns (while serving a federal probationary sentence for that very crime), the defendant exposes his unworthiness to reap the benefits of a lenient sanction.

• Washington Post
• Washington Times

See below the fold for prior TaxProf Blog coverage

• Is Marion Barry Angling for a Cabinet Appointment? (2/11/09)
• Marion Barry Avoids Prison in Tax Case (6/22/07)
• Prosecutors Seek Revocation of Former D.C. Mayor Marion Barry's Probation for Failure to File 1999-2004 Tax Returns Because He Missed Deadlines for Filing 2005 Return (3/23/07)
• Marion Barry Gets 3 Years Probation for Tax Evasion (3/10/06)
• Judge Postpones Marion Barry's Tax Sentencing (2/9/06)

Wesley Snipes Responds to Government's Opposition to His Motion to Leave U.S. for 5 Months Pending Appeal of Tax Conviction

Last week, I blogged the Government's opposition to Wesley Snipes' motion seeking permission to travel to Nambia from April 5 to April 29 (to film the movie Gallowwalker) and to Italy from May 4 to August 15 (to film the movie Game of Death while the appeal of his conviction on three misdemeanor tax fraud counts is pending in the Eleventh Circuit.  On Friday, Snipes filed his 7-page response:

The government’s argument that this Honorable Court should deny Mr. Snipes’ most recent request to travel abroad to complete work on a film and to begin working on another, on the theory that he has previously abused this Court’s trust, however, is misguided and based on inaccurate claims gleaned solely from press reports. ...

Notwithstanding the questions raised by the government in its Opposition, the current requests for travel arise out of contractual obligations. Reshooting of scenes is not a discretionary decision that rests in the hands of any artist, including Mr. Snipes. These decisions are made by the producers, director and motion picture companies. The artist’s decision to commit to making a film gives rise to an obligation to comply -- in this case, Mr. Snipes’ agreement to appear in a leading role in Gallowwalker. Thus, his ongoing fulfillment of his contractual responsibilities is not a reason for rejecting the present request. Indeed, it is in the nature of the film business that decisions about shooting locations, schedules and the completion of filming and editing cannot be controlled by the artist. Allowing Mr. Snipes the ability to comply with those obligations by reshooting several scenes would be consistent with this Court’s exercise of discretion to permit him to appear in the film in the first place, and would facilitate his earning of income to assist in meeting his past obligations to the government.

Finally, the government has presented no reason to reject Mr. Snipes’ request to film his next project, The Game of Death, this spring and summer. ...

It hardly seems logical that the government would take the position that international travel for business reasons should be denied on the ground that, according to the prosecutors, bail pending appeal should not have been granted in the first place. ...  To ask this Court to pre-judge the appeal at this stage, as the government seems to attempt, is utterly inappropriate. More to the point, the government does not now contend there is any reason, based on new evidence or otherwise, to say that Mr. Snipes is a danger to the community, that his appeal has been interposed for the purpose of delay, or that he is likely to flee. In short, the material on pages 3-11 of the Response does not support the government's conclusion that the motion for travel should be denied, any more than its mistaken claim of prior violations.
                

Survivor Winner Richard Hatch Files Habeas Petition to Get Out of Jail

Richard Hatch, the first winner of the CBS reality TV show "Survivor," has filed a habeas petition seeking to be released from prison where he is serving his conviction for failing to pay taxes on his $1 million prize.  United States v. Hatch, No. 06-1902 (1st Cir. 2/1/08):

• Associated Press
• How Appealing
• Providence Journal

See prior TaxProf Blog coverage below the fold:

• Survivor Winner Richard Hatch Appeals Tax Evasion Conviction to Supreme Court (6/4/08)
• Survivor Winner Richard Hatch Loses Appeal of Tax Evasion Conviction in First Circuit (2/3/08)
• Prior TaxProf Blog coverage: "Fat Naked Guy" Gets 51 Months for "Survivor" Tax Dodge (5/16/06)
• Survivor Winner Hatch Blames Tax Troubles on Show's Producers (1/21/06)
• Jury Selection Begins in Survivor Winner Richard Hatch's Tax Evasion Trial (1/11/06)
• Survivor: Tax Evasion (12/26/05)
• Survivor Winner Richard Hatch Indicted for Tax Evasion for Failing to Report $1m Income (9/9/05)
• Survivor Winner Richard Hatch Blames CBS for His Tax Woes (3/13/05)
• Survivor Winner Richard Hatch Reneges on Plea Deal with IRS (3/7/05)
• Survivor Winner Richard Hatch Cannot Survive IRS (1/19/05)

Cadwalader Tax Memo: The Manny Ramirez Tax

In a humorous jibe at the AIG bonus tax, Steven D. Lofchie, co-chair of Cadwalader's Financial Services Department, has posted a "Clients & Friends"  tax memo on the firm's web site:  The Manny Ramirez Lightbulb: Also (2 Ideas in 1 Memo) Putting Pay in Perspective:

I am enraged! and outraged! plus morally reprehensibled (did I say I am outraged!), that Manny Ramirez has inked another huge contract -- this time with the Los Angeles Dodgers. For those of you who do not follow baseball, know this: Manny Ramirez was getting paid about $20 million or so a year last season (which is nowhere near a year) by the BoSox. In the middle of a close pennant race, Manny decides to assault a team official, fake phony knee injuries in both his knees, and duck out of playing in crucial games until he forces a trade and costs the Sox the World Series.

My Idea. Lightbulb! Goes off! A lightbulb in my mind shining for all the world see my brain's idea! Why not a tax! Because the BoSox receive State Aid (all MLB sports teams do), Massachusetts Secretary of State Galvin, whom I would bet is a huge BoSox fan, should drop a big tax like a bombshell on Manny's salary, which is basically Stolen Money from State Revenues. And I'm not talking about some lame 90% tax either that lets Manny walk all the way (the guy wouldn't even run there on his fake bad knees) laughing out loud to the bank with $2MM (10% of 20MM). Boston has no place for 90% ballplayers. I am looking for the big three digits (110%!).

A Lightbulb in New York. New York State may also use My Idea. Getting back some of that Stephon Marbury money would help the Knicks' salary cap and leave money on the side to pay to put solar panels in Madison Square Garden so as to cook "green" [environmentally conscious and friendly] hot dogs.

Alex, Meet Andrew. Can you just imagine next year, one Sunday morning, Alex Rodriguez, reading the New York Times, goes out in his bathrobe to pick up the newspapers, in his fuzzy Yankee Slippers and robe that he got either for free or at a big discount, and there is a tax lien on his illgotten McMansions in his mailbox. Because Alex somehow "forgot" to withhold to pay the taxes that Mr. Cuomo is going to impose on him for letting down the Yankees (who receive major funding from the City and can't even make the playoffs paying ten times more in salary and "bonuses" than Tampa Bay). You say Mr. A.G. Cuomo can not put a lien on Alex's houses because the tax bill hasn't been passed yet by our lame legislature. That is a lame excuse, kind of like Alex's hitting in the big games in a Stadium built with taxpayer money (your taxpayer money and mine). If Alex isn't getting himself prepared for the big tax bill, he needs to wake up and smell the coffee. (Maybe Madonna can brew him some.)

[T]he tax system is completely messed up. ...

A Good Offense. Also, if some team was coming to town that had a dirty player on it, or who talked too fast, or tried to show you up, hit them with the old 200% tax. I’m talking to you, Payton Manning. Double tax. Plus a tax on all products you advertise. And invalidate all the Master Cards.

Do you remember the time Arlen Specter, the Senator from the Steelers, tried to put a tax on the greatest Football Mind of all Time (“FMT”—it’s not you anymore, Vince), Bill Belichick? But Teddy Kennedy, my main man from South Boston,2 completely shot Arlen down. That should teach you a lesson, Arlen: Don’t try to legislate with the big dogs! ...

Earned Income Tax Credit. Should go to guys like Dustin Pedroia: Still on his rookie contract and he is both RoY and MVP. Also to Amir Sadollah, the best ultimate Fighting Champion, ever. Plus, to good art that is not boring. Give an EITC to Beavis and Butthead: Speaking Truth to Power!

As someone who grew up in Boston and had a Bruno Sammartino poster on my bedroom wall, I loved the closing footnote:

Steven Lofchie was raised in Boston, Massachusetts. He believes the land of Bill Russell, Bob Cousy, and Larry Bird; of Bill Belichick and Tom Brady and Rodney Harrison; of Bobby Orr; of Doug Flutie; of Bruno Sammartino; of Ted Williams and David Ortiz, must not be trounced on by Manny Ramirez.

• Above the Law
• American Lawyer

Government Opposes Wesley Snipes' Motion to Leave U.S. for 5 Months Pending Appeal of Tax Conviction

I previously blogged the federal district judge's order granting actor Wesley Snipes' motion to travel overseas while the appeal of his conviction on three misdemeanor tax fraud counts is pending in the Eleventh Circuit. The order permitted Snipes to travel to London in April (to help edit his new movie, Gallowwalker) and to Bangkok in May (to film the movie Chasing the Dragon), as well as the judge's subsequent order directing  Snipes to turn in his passport after he was photographed in Dubai in the United Arab Emirates at the Nov. 20 grand opening of the $1.5 billion Atlantis hotel.

Last Friday, Snipes filed a motion seeking permission to travel to Nambia from April 5 to April 29 (for more filming on Gallowwalker) and to Italy from May 4 to August 15 (to film the movie Game of Death.  The Government yesterday filed a motion opposing the request.

• Associated Press
• E! Online
• The Smoking Gun

WWAMD: What Would Arthur Miller Do?

A second preview (see the first preview here) of this weekend's 2009 NYU Law Revue: 

(Hat Tip: Above the Law.)

"Dancing With The Stars" Champ Helio Castroneves' Tax Evasion Trial

The tax fraud trial of race car driver and Dancing with the Stars champion Helio Castroneves is turning on the application of the constructive receipt doctrine.  For a detailed discussion of the transaction at issue, see Sports Illustrated: The Nuts and Bolts of Helio's Complicated Tax Case.  For additional commentary, see:

• Associated Press:  Accountant:  Castroneves Didn't Seek Tax Evasion
• Huffington Post:  Helio Castroneves Is Dancing with the Feds at Tax Fraud Trial
• New York Times: Indy 500 Winner in Court Over Taxes
• Tax Girl:  Castroneves Dances His Way Through Court

Please Repeat the Question

The NYU Law Revue offers this hilarious take on the laptops in the classroom debate:

Please Repeat the Question from Amanda Bakale on Vimeo.

(Hat Tip:  Volokh Conspiracy, Donald Clarke.)

Tax Movies

From Robert G. Nassau (Syracuse):

The Syracuse University College of Law Tax Society, the Law School’s #1 student organization dedicated to all things tax, has been holding Movie Nights this year, at which it screens tax-related movies. So far it has shown Stranger Than Fiction (2006), in which a charming-though-confused Will Ferrell plays an IRS agent auditing (then loving) small bakery owner Maggie Gyllenhaal; A Taxing Woman (a/k/a Marusa no Onna; 1987), written and directed by esteemed Japanese auteur Juzo Itami, in which a female revenue agent relentlessly audits a gangster businessman; and, most recently, Harry’s War (1981), a monstrously bad movie that glorifies the tax protestor movement, and which was written and directed by Keith Merrill, who somehow won the 1974 Oscar for Best Documentary Feature for “The Great American Cowboy.”

Reeling, pun intended, from the experience of Harry’s War, and knowing only two other potential tax-related movies (The Firm (1993) and A Taxing Woman’s Return (1988), the Tax Society’s Board of Directors commissioned me to solicit recommendations from the finest available resource known to tax-related movie lovers: the TaxProf ListServ. The following are the suggestions that were received.

Mike McIntyre (Wayne State) first noted “I also like A Taxing Woman’s Return. It is a sequel that works. The Taxing Woman duo never made it to DVD as far as I know. [Ed. Note: they’re not on Netflix; we got A Taxing Woman on VHS at the local library.] The second one was controversial in Japan, and the rumor mill claims that the director, Juzo Itami, was murdered as a result of making the film.” Prof. McIntyre (and Roberta Mann) endorse Tax Me if You Can (2004), a PBS Frontline expose of the tax-shelter industry. Prof. McIntyre played a part in this project, which is perhaps the only film ever to give a “Special Thanks” to Tax Notes. Prof. Mann reports that she “screened it at the law school last month, to quite good reviews. I've also regularly used it in Business Tax and Tax Policy classes.” Finally, Prof. McIntyre likes Adam’s Rib (1949), which “has some tax and is a fun old timer with Hepburn and Tracy.”

Bryan Camp (Texas Tech) had three recommendations: You Can't Take it With You (1938), “where the family patriarch is a goofy old guy who brags he has never paid his income tax and then, in the final act, the IRS man shows up”; The Producers (1968 and 2005): “the 1968s version with Gene Wilder and Zero Mostel being much better than the 2005 version with Matthew Broderick and Nathan Lane, although Will Ferrell does a great job in the latter version as the nutty neo-nazi playwright; this was not directly tax but it was a scheme to bilk investors and so you could link it to the tax problems faced by the Madoff investors”; and Say Anything (1989), “a terrific movie with a young Jon Cusack and a middle-aged John Mahoney, who plays the father of the girl Cusack is courting; Mahoney's character has a house full of stuff that he bought for just under $10,000 representing disposition of unreported income; he eventually gets caught for tax evasion and lands in jail; the movie is excellent on many levels, including having somewhat complex characters who are neither all good nor all bad.”

Michael Knoll (Pennsylvania) suggested Slap Shot (1977) with Paul Newman. “The tax angle is that the owner holds the team as a tax shelter. The tax shelter story line has a nice teaching point since the owner claims she would be better off folding the team and taking a loss rather than selling it at a profit. An added bonus for your group is that the movie has several connections to upstate New York.”

Jeffrey Sherman (Chicago-Kent) is another Slap Shot fan, but cautions: “I second Michael's recommendation. I remember vividly the scene he describes, and it's a fine one. But I'd urge you to screen it for yourself before recommending it to the group. The movie is filled with extremely offensive language: not just the usual 4-letter suspects but also extremely misogynistic and homophobic remarks. The offensive language is not gratuitous; it's completely in character. But still. . . . Also, there's a great deal of brutality and violence in the movie: violence which is portrayed as admirable ‘jolly good fun.’ Again, it fits the movie perfectly, but you may want to warn students about what to expect.” Prof. Sherman also suggests The Young Philadelphians (1959), in which Paul Newman, again, “playing a young lawyer, gives some tax advice (correct advice, as I recall) to Billie Burke.”

Allan Samansky (Ohio State) also gives two thumbs up to The Young Philadelphians, noting: “an oldie but goodie -- The Young Philadelphians with a quite young Paul Newman as a tax lawyer who changes specialties to represent a friend accused of murder (as I recall).”

Mark Cochran (St. Mary's) mentioned National Treasure (2004), “the climactic scene of which takes place underneath Trinity Church, which was the employer of the taxpayer in Stanton (companion case to Duberstein).”

Dorothy Brown (Emory) noted that in the sequel to National Treasure, National Treasure: Book of Secrets (2007), one of the character’s Ferrari, which he purchased with his share of the booty from the original National Treasure, is seized to pay back taxes. “Line from the movie: Something to the effect of ‘How much taxes are owed on $5 million? Answer: $6 million.’” Prof. Brown also remembered The Day After Tomorrow (2004), which is “a climate-change movie with a library scene where they have to burn books to keep warm, and they grab either the IRS Code or tax books.” [Ed. Note: My son loves that scene.]

Joel Newman (Wake Forest) spotted another movie/actual-tax-law link in Chinatown (1974), “a truly excellent movie, which is all about the land that was the subject of the Inaja Land case.”

Eric Lustig (New England) went beyond film to television, observing: “What about TV Series night. You could go back to the Honeymooners (there is a tax episode that a colleague of mine raves about). You could go back to LA Law. And there is a great Seinfeld Episode.”

In addition to these TaxProf recommendations, a Tax Society member uncovered The Taxman Cometh: Some Films about Tax Law and Its Effects, compiled by Christine Corcos (LSU).  Prof. Corcos lists many of the movies described above, but also a handful of others, including all of the Robin Hood films.

Then there is the Internet Movie Database, which, with a little patience or a research assistant, neither of which I have, one can uncover such (potential) gems as What a Way To Go (1964), which IMDB describes as follows: “This black comedy opens with Louisa Foster donating a multimillion dollar check to the IRS. The tax department thinks she's crazy and sends her to a psychiatrist. She then discusses her four marriages, in which all of her husbands became incredibly rich and died prematurely because of their drive to be rich.”

Finally, Matthew Schnall provided the opening words from the most successful of all the movies on this list: "Turmoil has engulfed the Galactic Republic. The taxation of trade routes to outlying star systems is in dispute. Hoping to resolve the matter with a blockade of deadly battleships, the greedy Trade Federation has stopped all shipping to the small planet of Naboo. While the Congress of the Republic endlessly debates this alarming chain of events, the Supreme Chancellor has secretly dispatched two Jedi Knights, the guardians of peace and justice in the galaxy, to settle the conflict . . .." If you don’t know which movie that’s from, I’m not going to tell you.

   

Faber Law School? The Seven-Year J.D.

One of my favorite lines in Animal House is when John Belushi's Bluto Blutarsky is told that he and his frat brothers are going to be kicked out of Faber College, he says "Seven years of college down the drain!"  Arizona State yesterday announced a new flex-time option giving students the opportunity to earn a J.D. in seven years:

To sign up for the College of Law's flexible schedule, students will follow the regular application process, then after admission, elect to take a reduced course load. The normal course load is four or five courses each semester. A reduced course load could mean two or three courses. Students would have two years to finish the normal first-year curriculum, and would have a total of seven years to complete the J.D. The flexible-schedule program is not a separate part-time program, and students would take courses with full-time J.D. candidates and from the same professors.

Tax Scandals of the Rich and Famous

Boston Globe:  Tax Scandals of the Rich and Famous.  (Hat Tip: Eric Lustig.)

Not So Beautiful Day: Bono "Hurt" by Criticism of His Move From Ireland to Avoid Tax on Music Royalties

Irish Times:  Bono "Hurt" by Criticism of U2 Move to Netherlands to Cut Tax, by Brian Boyd:

U2 singer Bono says he was “stung” and “hurt” by criticism of the band moving part of its business to the Netherlands to lessen its tax burden. ...

U2’s move was criticised by politicians and some development groups. “We pay millions and millions of dollars in tax. The thing that stung us [about the criticism] was the accusation of hypocrisy for my work as an activist,” the singer says. ...

As an activist who has access to world leaders, Bono has called for the developed world to lighten Africa’s debt burden, combat poverty, promote fair trade and increase funds in the battle against Africa’s Aids pandemic. His work has been recognised by three nominations for the Nobel Peace Prize and a “Nobel Man of Peace” prize. Two years ago the singer was awarded a knighthood in the British honours list.

Speaking about a Christian Aid report from two years ago which criticised him for “tax avoidance”, the singer says: “It hurts when the criticism comes in internationally. But I can’t speak up without betraying my relationship with the band – so you take the shit. People who don’t know our music – it’s very easy for them to take a position on us – they run with the stereotypes and caricature of us.”

(Hat Tip:  Tax Justice Network.)  Prior TaxProf Blog coverage:

• U2 & Bono Bail Out to Avoid Irish Tax (Part 1)
• U2 & Bono Bail Out to Avoid Irish Tax (Part 2)
• Bono, Tax Avoider; The Hypocrisy of U2
• Netherlands Is Latest Tax Shelter Hot Spot

Amazing Video of Flight 1549

(Hat Tip: Wall Street Journal Law Blog.)