Michael Jackson’s estate prevailed over the Internal Revenue Service on several key issues in a closely watched court case, an outcome that will push the estate’s tax burden below the government’s initial assessment.
In a ruling issued Monday, U.S. Tax Court Judge Mark Holmes found that the singer’s name and likeness were worth $4 million when he died in 2009 at the age of 50, not the $161 million the government had claimed. The IRS won on some other points about the value of other Jackson assets, but will get far less than the hundreds of millions of dollars in taxes and penalties it had sought from the estate.
The government and the estate settled some issues, and the case came down to the question of how to value three main assets: Mr. Jackson’s name and likeness and two entities tied to the music business.
The estate initially started with some lower values, but by Monday’s decision, it had said those three assets were worth $5.3 million combined. The government had started with higher values and an estate tax bill topping $500 million, but eventually concluded those three assets were worth $481.9 million combined. Judge Holmes, in his ruling, said they were worth $111.5 million. The estate’s actual tax bill will be determined later. ...
A central question in the case was this: Was it foreseeable that the estate would—as it since has done—build a successful business around Mr. Jackson’s image? Or was that such a long shot that the estate could plausibly claim, as it initially did, that Mr. Jackson’s name and likeness was worth $2,105? As Judge Holmes put it, the estate was “valuing the image and likeness of one of the best known celebrities in the world—the King of Pop—at the price of a heavily used 20-year-old Honda Civic.” ...
Prosecutors accused Robert Brockman, a litigious, sometimes penny-pinching software entrepreneur, of hiding $2 billion from the Internal Revenue Service. ...
[In] the largest criminal case ever brought against a person accused of evading U.S. taxes, [f]ederal prosecutors in October charged Mr. Brockman with using a web of offshore entities to conceal about $2 billion in income from the Internal Revenue Service.
Mr. Brockman has pleaded not guilty to 39 criminal counts, including tax evasion, wire fraud, money laundering and evidence destruction. He and his attorneys didn’t respond to requests for comment.
Prosecutors allege the bulk of the tax evasion stemmed from profits Mr. Brockman made from investments with Vista Equity Partners, a private-equity firm he helped launch in 2000 and which now manages $73 billion in funds dedicated to software investments.
Vista founder Robert Smith, the wealthiest Black person in America, settled his own tax-evasion case with the government, which was made public on the day of Mr. Brockman’s indictment. Mr. Smith has agreed to testify against his former mentor, one of at least two Brockman confidants to turn on him. ...
The record-setting case pits Mr. Brockman, a billionaire with a reputation as a relentless litigant, against the immense resources of the federal government. Legal specialists say the government appears to have strong evidence, but federal prosecutors may face challenges trying the case because of the complexity of tax laws governing offshore trusts.
The sex-trafficking scandal surrounding the late Jeffrey Epstein already has tarnished the reputations of prominent politicians, businessmen, and the British royal family. Now it’s casting a dark shadow on an estate tax-avoidance strategy popular among Wall Street CEOs and tech entrepreneurs.
The strategy exploits a loophole that Congress unintentionally left open when it passed provisions related to grantor retained annuity trusts, or GRATs, in 1990. Use of these trusts already has cost the IRS—by one estimate—well over $100 billion in just the last two decades. A recent filing with the Securities and Exchange Commission by the private equity firm Apollo Global Management reveals that the firm’s longtime CEO, Leon Black, relied on Epstein’s assistance to extract more than $500 million of tax savings from GRATs.
[Bob Dylan] just sold the rights to “Blowin’ in the Wind” and 600 other songs to Universal Music Publishing Group for a reported $300 million. Added to his previously reported net worth of $200 million, the transaction implies that Dylan will reach his 80th birthday on May 24 as a half-billionaire.
This is a tribute to his genius and, on the whole, to a political and economic system that rewards artists whether they merely entertain multitudes — or inspire them to march against that same system.
Nevertheless, some socially conscious musician could write a song protesting the Dylan deal, because of what it reveals about that engine of irrationality and inequality known as the U.S. tax system.
The answer, my friend, is blowin’ in the tax code.
The sale of Bob Dylan’s songwriting catalog to Universal Music Publishing Group, announced this week, likely means he is trading an ongoing income stream for a lump sum now. The price hasn’t been revealed but is said to be between $300 million and $400 million.
Mr. Dylan’s sale is the latest and largest of a spate of similar deals this year that come with significant tax benefits both for the songwriters selling the rights and for the companies buying them, and those incentives are encouraging transactions. ...
For musicians, a key advantage is that they can sell self-created works and owe capital-gains tax rates of 20% on the sale. That’s instead of owing ordinary tax rates of up to 37% each year on the royalty income they get from streaming, licensing and other uses of their works.
The lower capital-gains rate isn’t available to painters, filmmakers or videogame developers, who pay ordinary income-tax rates on sales as well as royalties.
I read today that Bob Dylan has sold the copyrights to more than 600 of his songs, pretty much all of them, to Universal Music for a reported $300 million. It sounds like a lot of money, but scrolling down in one of the stories, I saw that Stevie Nicks recently got $80 million for hers. Heck, Dylan is not even four times Stevie Nicks? It does not compute. Maybe he sold too cheap.
Anyway, this news causes my alleged mind to turn to a time-honored pastime among tax types: allocating the mega-purchase price among the various songs. The whole catalog is worth the overall price Universal is paying, but how much would you pay for, say, just "All Along the Watchtower"? Tax people have to unbundle packages this way all the time. The packages just aren't usually as cool as this one. ...
Why is he selling now? The income tax hit will be massive. Maybe he's thinking his tax rates are going to go up next year under Biden, and in whatever state he calls home. And maybe he's getting a better tax rate by selling than he would get by continuing to collect annually. But still, he's setting up a nice payday for the IRS if he's cashing in all his chips at once. (Maybe he's getting paid out over a few years, which might allow him to spread the tax hit out a bit over time.)
For a number of reasons, late 2020 may be the absolute optimal moment to sell a top-tier music catalog, and Bob Dylan’s catalog is arguably on a tier of its own near the very top. ...
The deal’s value to Dylan depends on how the proceeds get taxed. A gigantic windfall like his would normally be taxed as a capital gain at a rate of 20% under current law. But President-elect Biden has proposed taxing capital gains as ordinary income for taxpayers with income over $400,000. The top ordinary income rate is now 37%, and Biden has proposed raising it to 39.6%. ...
After a lobbying effort, Dan Gilbert, billionaire founder of Quicken Loans, won special tax status for wealthy areas of downtown Detroit where he owns billions worth of property.
Billionaire Dan Gilbert has spent the last decade buying up buildings in downtown Detroit, amassing nearly 100 properties and so completely dominating the area, it’s known as Gilbertville. In the last few years, Gilbert, the 57-year-old founder of Quicken Loans and owner of the Cleveland Cavaliers, has also grown close to the Trump family.
Quicken gave $750,000 to Trump’s inaugural fund. Gilbert has built a relationship with Ivanka Trump, who appeared at one of his Detroit buildings in 2017 for a panel discussion with him. And, last year, he watched the midterm election returns at the White House with President Donald Trump himself, who has called Gilbert “a great friend.”
Gilbert’s cultivation of the Trump family appears to have paid off: Three swaths of downtown Detroit were selected as opportunity zones under the Trump tax law, extending a valuable tax break to Gilbert’s real estate empire.
The Washington Nationals are World Series champions for the first time—and for the first time in line for lofty bonuses subject to a mix of taxes and fees.
Each Nationals player is in line for an estimated $416,837 for their postseason efforts, although they’ll bring home about $238,639 after taxes if they live in Maryland or Virginia. Players who live in the nation’s capital will forfeit an extra $13,339 due to the District of Columbia’s higher income taxes. World Series runner-up the Houston Astros are set for $262,027—$165,077 of which they’ll pocket after similar fees.
If you watch TV, listen to the radio, read a newspaper or hear conversations, invariably you will notice many organizations offering their services to settle tax liabilities for pennies on the dollar. How real are these offers to help a delinquent taxpayer?
There is no question that the Internal Revenue Service (IRS) has liberalized its collection policies and procedures. Specifically, the agency has established a “Fresh Start” initiative to permit qualified taxpayers a means to pay less taxes through the Offer in Compromise (O.I.C.) program. The IRS also grants different types of installment arrangements for taxpayers who may not qualify for an O.I.C. ...
Even though the O.I.C. program has become more commercialized, there are many taxpayers who do not qualify. Last year, Actor Wesley Snipes made headlines when his O.I.C. was rejected by the IRS. Upon information and belief, Snipes failed to file Federal Income Tax Returns for the years 2001-2006, allegedly owing the IRS at least $23.5 million. After the IRS issued numerous collection notices and liens, Snipes filed a Request for a Collection Due Process Hearing. He then submitted an O.I.C. for an $842,061.00 offer in full satisfaction of his $23.5 million debt to the IRS.
For Major League Baseball players, three teams are at the bottom of the standings on state taxes: the Los Angeles Dodgers, San Diego Padres and San Francisco Giants.
That’s because California is in a league of its own on personal income taxes. We’ve got by far the highest state rate in the nation, topping out at 13.3%.
By contrast, Pennsylvania has a low flat rate for every taxpayer regardless of income. It’s just 3.07%. That’s one reason why superstar slugger Bryce Harper signed an eye-popping 13-year, $330-million contract last week with the Philadelphia Phillies, spurning the Dodgers and Giants.
Harper will save tens of millions in taxes by signing with the Phillies instead of a California team. “With a contract of that magnitude, it’s dramatic,” Scott Boras, Harper’s agent, says of the taxes. “It could be almost a full year’s compensation." “The Giants, Dodgers and Padres are in the worst state income tax jurisdiction in all of baseball,” Boras adds. “Players really get hit.” ...
In 2 Corinthians 3:7-11, Paul writes about two “ministries.” Here’s what he says:
Now if the ministry of death, carved in letters on stone, came with such glory that the Israelites could not gaze at Moses’ face because of its glory, which was being brought to an end, will not the ministry of the Spirit have even more glory? For if there was glory in the ministry of condemnation, the ministry of righteousness must far exceed it in glory. Indeed, in this case, what once had glory has come to have no glory at all, because of the glory that surpasses it. For if what was being brought to an end came with glory, much more will what is permanent have glory”
The New England Patriots are a ministry of death. Their greatness is carved in letters on stone. They are so glorious that mere mortals cannot look them full in the face. Tom Brady wears Ugg boots in public and barely takes any heat for it. The Patriots are unassailable. I do not rend my garments and I do not gnash my teeth for a simple reason: I am already dead.
It never occurred to me that a Tax Court decision could star in a motion picture, but it has happened. The film has a pretty provocative title On The Basis of Sex, but they don't mean it that way. Felicity Jones portrays a young Ruth Bader Ginsburg (RBG) ... and Arnie Hammer as her husband Martin Ginsburg. I have it on very good authority that Martin Ginsburg was a first-rate tax attorney (See follow-up). And another star in the movie is a Tax Court decision. How often does that happen? ...
The decision is Charles E. Moritz v. Commissioner of Internal Revenue, which was decided by Judge Norman O. Tietjens in 1970 in favor of the IRS. Mr. Moritz had represented himself — not surprisingly given the low stakes. The decision was appealed to the Tenth Circuit where Mr. Moritz was represented by Ruth Bader Ginsburg and Martin Ginsburg backed up by Melvin Wulf of the ACLU and Weil, Gotshal & Manges. The lead attorney for the United States was James Bozarth played by Jack Reynor. Sam Waterston, who has played a lawyer on TV more than once, portrays Solicitor General Erwin Griswold. ...
In a dispute between state tax officials and Cincinnati’s professional baseball team, the Ohio Supreme Court today quoted the team’s longtime radio announcer by declaring, “This one belongs to the Reds.” [Cincinnati Reds v. Testa, Slip Op. No. 2018-Ohio-4669 (Nov. 21, 2018)]
A divided Supreme Court determined the Cincinnati Reds were exempt from paying “use” tax on bobbleheads and other promotional items given to attendees at selected home games. The Court concluded the team successfully demonstrated that the cost of the items were factored into the cost of game tickets and counted as a tax-exempt “resale” of the items to fans.
Justice Patrick F. Fischer cited Reds announcer Marty Brennaman and several other sports figures as he delved deeply into the rich history of Ohio’s influence on professional baseball in the Court’s lead opinion. Because of the unique and undisputed evidence in the record, Justice Fischer cautioned that the ruling may not be applicable to other professional sports teams and organizations that sponsor promotional item giveaways. The Reds argued that rather than discount the ticket price to less-desirable games, the team factored a portion of ticket price to cover the costs of giveaways as a means to boost attendance.
In 2018, Peter Strzok was fired from the FBI, based on text messages that he sent degenerating President Trump. A week later, a group set up a GoFundMe page soliciting funds to help with his “legal costs” and to replace his “lost income.” As of early September, that fund had raised over $450,000. GoFundMe states on its website that donations made are usually considered to be “private gifts” and not taxable to the recipient. Using Mr. Strzok’s campaign as an example, this article will discuss the current standards for determining whether a transfer qualifies as a nontaxable gift and the policy rationale for the exclusion of gifts.
If a seller has been estopped legally from denying the existence of ghosts and poltergeists on the premises—thus meaning the house is haunted a matter of law, then how should the haunting be added in to the cost basis for tax purposes? More generally, if a house is legally haunted, what does this mean for tax purposes?
In the famous popular 1st year law student case—colloquially known as the Ghostbusters case—Stambovsky, v. Ackley, the New York Court of Appeals deftly wrote, “as a matter of law, the house is haunted” If a seller has been estopped legally from denying the existence of ghosts and poltergeists on the premises—thus meaning the house is haunted a matter of law, what does this mean for tax purposes?
If your favorite NFL team doesn’t make it to the playoffs, President Donald Trump’s tax overhaul might be in part to blame.
The 2017 law could put teams in states with high personal income tax rates at a disadvantage when negotiating with free agents thanks to new limits on deductions, including for state and local taxes, according to tax economist Matthias Petutschnig of the Vienna University of Economics and Business.
Petutschnig’s research into team performance over more than two decades shows that National Football League franchises based in high-tax states lost more games on average during the regular season compared to teams in low or no-tax states. That’s because of the NFL’s salary cap for teams, according to Petutschnig; if they have to give certain players more money to compensate for higher taxes, it reduces how much they pay other players and lowers the team’s overall talent level [Regulatory Compensation Limits and Business Performance – Evidence from the National Football League].
Aretha Franklin left no will when she died last week at the age of 76, according to documents filed on Tuesday in a Michigan court, which could result in details of her personal finances being made public. ... According to Michigan law, the assets of an unmarried person who dies without a will are divided equally among their children. Ms. Franklin had been married twice, but was long since divorced. ...
[H]igh-profile probate proceedings can drag on for years and lead to infighting among families, lawyers and others. Such estates can become especially complicated when it comes to issues like music rights. The case of Prince, who died two years ago and left no will, has led to numerous family disputes and even the revocation of a multimillion-dollar music deal.
Amanda DiChello, an estate lawyer at the firm of Cozen O’Connor in Philadelphia, said that a surprising number of celebrities and wealthy people die without a will.
Aretha Franklin, the Queen of Soul, died without a will. Papers have already been filed in court by Franklin’s four sons and niece. That means there will be public proceedings. There could be court battles too, depending on who claims what. Unexpected celebrity deaths can make the rest of us think about what documents we need to have in place. The tax and financial hassle of probate or intestacy can be huge, even for normal sized estates. When you add the extra zeros that go with a successful entertainer, the failures can seem much more palpable.
The conviction of former Trump campaign chairman Paul Manafort on eight counts of financial crimes nets the first conviction for Special Counsel Robert Mueller.
Political commentators on both sides are jabbering over this. They also have the guilty plea by former Trump fixer Michael Cohen to talk about. But aside from politics, there are some serious tax lessons here for everyone. And they are surprisingly simple.
I'm back from vacation, but busy preparing for the start of classes, so I offer another Classic Lesson that I have been saving. I hope you enjoy it. I will return next week with a new Lesson based on a recent case.
I find tax more interesting than football. But I know I am not like most people. So I enjoy using the classic case of Hornung v. Commissioner, 47 T.C. 428 (1967), because it not only teaches students a bit about football history, it also helps them understand a really important tax concept: the doctrine of constructive receipt. As a bonus, it is also one of those fun cases where the taxpayer and the IRS take the opposite of their normal positions, with amusing consequences.
Paul Hornung was an outstanding football player in the 1960’s, winning a bunch of very well known awards: the Heisman Trophy, the NFL MVP award, and induction into both the professional and college football halls of fame. Here's a Sports Illustrated tribute to him.
Hornung also won a Corvette on December 31, 1961, when his team (the Green Bay Packers) beat the New York Giants for the National Football League Championship. Remember, at that time the NFL was the main football league so this was, basically, the Super Bowl. The AFL was only just starting and it was several years before the first designated “Super Bowl” game occurred between the leagues.
Hornung was selected by Sport Magazine as the game’s most valuable player. That selection came with an award: a brand-spanking new 1962 Corvette. The award was announced in Green Bay at the conclusion of the game in the late afternoon of Sunday, December 31, 1961. The car was in Manhattan. Hornung picked up the car the next week at a lunch given in his honor by the magazine. He sold the car a few months later for just over $3,000. He did not report any income from receiving the Corvette, either in 1961 or in 1962. When the IRS audited his 1962 return, he claimed that if receipt of the Corvette was income, it was income in 1961, not 1962, under the doctrine of constructive receipt. To see how that worked out for him, you will need to dive below the fold.
Have you heard of the "pink tax"--a term for the routine practice of charging more for products and services targeted to women than those targeted to men? If not, you will soon. Though the term's been around for years, and the practice itself has existed from the earliest days of commerce, both have gained more prominence lately. That's thanks to a study showing just how common it is, and a bill introduced in the House to make gender-based pricing illegal. Now, Burger King has gotten into the act in a very witty way.
To highlight the unfairness of the pink tax (so called because products for women are often colored pink), Burger King recently briefly offered its regular Chicken Fries for $1.69 a box, or "Chick Fries," the same food in the same serving size, but in a pretty pink box where the chicken has a bow and eyelashes, for $3.09. Then they created an ad.
Ever since his untimely death, the press and the public hasn't been able to get enough of Anthony Bourdain. His name caused another commotion this week when his will was probated in New York. The New York Post’s Page Six headline read “Anthony Bourdain Worth Only $1.21M at the Time of His Death.” Social media responded immediately as the actual dollar amount just didn’t seem right. How could Bourdain’s net worth be so much less than the public previously speculated?
While a man’s worth is quite subjective, Bourdain, by all accounts, was an American success story. Though he often admitted that he’d lived paycheck to paycheck well into his 40s, by having an estate valued in excess of $1 million, Bourdain could be considered in the top 3% of all Americans in terms of wealth. In his case, the estate plan reflected two interesting aspects of the man and what he truly valued.
Estate Planning Is About Protecting Those You Love Bourdain was thorough in making provisions for his only child as the bulk of his estate will pass to her. ...
The $154 million question is: How much is the move to LA really costing James? As with any tax question, the answer is simple: It depends. On a lot of factors.
About the only fact we know is that his salary this season will be $35.7 million. The rest is fuzzy. Will he become a California resident? He owns a house out there, so it seems to make sense that he would be a resident after he signs his four-year deal. Not so fast — California has some of the most liberal residency laws in the country. Rather than focusing on days spent in the state, California focuses more on domicile and the temporary/permanent nature of one’s stay there. ...
Should he become a California tax resident, this move will cost him $5.2 million this year on salary and endorsement income, not to mention higher taxes on investment income. This would end up being over $21 million in additional state income taxes over the life of the contract.
Earlier this week, a charity auction to have lunch with Warren Buffett resulted in a winning bid of $3,300,100. The winning bidder, who has chosen to remain anonymous, won the right to eat with the billionaire at Smith & Wollensky steakhouse in New York City. The annual lunch with Buffett benefits Glide Foundation, which offers food, shelter, health care and other services to homeless and low-income people in San Francisco.
When you have the means to spend $3 million on lunch, you might not be looking for a tax break. But in this case, the bidder may qualify for one. Here's why it could make good tax sense this year:
Mark Holmes writes pithy tales of failed marriages and booming businesses, weaving in F. Scott Fitzgerald, historical digressions and groan-aloud puns.
Now he’s working on a much-anticipated thriller (get it?) about the late pop superstar Michael Jackson.
Mr. Holmes is no best-selling author. In fact, his work is free. Mr. Holmes is a federal judge known for the clear, colloquial writing style he brings to arcane rulings on the U.S. Tax Court.
He’s handling the final phases of the hugely complicated court case stemming from Mr. Jackson’s estate-tax return. An unusual combination of music fans and tax nerds is anticipating the end of the five-year court battle, and Mr. Holmes is poised to apply his distinctive voice to one of the most recognizable voices of the 20th century.
At first it appeared that Michael Cohen had paid off Stormy Daniels with his own money, and without President Trump's knowledge. Then, Rudy Giuliani said President Trump had reimbursed him. Then, there was some reshuffling about who knew what when. There were some awkward questions about whether President Trump knew of the deal at the time, or only learned of it later. The timing and mechanics of the reimbursement seem a little confused. From a tax viewpoint—which surely isn't the most important part of this story--many of these details may not matter. Even so, the tax issues are an interesting side show. Just about every kind of payment has tax consequences, to both the recipient and to the one who paid the money.
There's no question that Stormy Daniels would have to pay tax on the $130,000 payment. Settlement money is almost always taxable to the recipient, unless it is for personal physical injuries or physical sickness. That is one of the rules about taxes on legal settlements. But on the payer side of the equation, it isn't so clear whether someone paying her could deduct the payment, leaving aside the question of who effectively paid the money. Michael Cohen may have expected reimbursement at the time or only learned of the reimbursement later. Someone else was ultimately paying the bill.
Congratulations on finding your Prince Charming! I don’t want to be the bad fairy at the festivities, but we need to have a serious talk about taxes.
Meghan, I know you lived as a U.S. citizen in Canada and may be aware of tax issues faced by the seven million or so Americans living abroad. And I know you’re committed to Harry, because you’ve given up a lot since you two became serious, including your lucrative acting career and your lifestyle website.
But I don’t think you know the tax torment many American expats face when they marry non-U.S. citizens—as you’re about to do. Nearly every financial move they make, and other moves they don’t think of as financial, raises a U.S. tax issue.
The Tax Court issued no opinions last week, likely because it was holding its Judicial Conference at Northwestern School of Law in Chicago. Our colleagues over at Procedurally Taxing attended and blogged about it here. Les Book reports (here) that the last session of the Conference was looking forward to the future of the Tax Court.
Future, Schmoocher. My love of history keeps my head buried firmly in the sands of the past. For not only is the past prologue, it’s also epilogue. That’s the lesson I take away from this Tax Court classic: Harold Jenkins v. Commissioner, T.C. Memo. 1983-667, a case I teach as an epilogue to the Supreme Court's classic Welch v. Helvering, 290 U.S. 111 (1933).The Jenkins case deserves your attention not only because of its lesson about the difference between business and personal deductions but also because of the poetry (?) it inspired both from Tax Court Judge Leo H. Irwin and from the IRS Office of Chief Counsel
Swag bags are a big perk of going to the Oscars. But movie stars who accept the goodies could owe a hefty tax bill. ...
For top-earning movie stars, the result could be a tax bill that eats up roughly half the value of the bag. While the recent Tax Cuts and Jobs Act lowered the top federal income tax rate, it still amounts to a hefty 37%. There’s also state income tax, which in California tops out 13.3%. In other words, movie stars who collect a gift bag worth $100,000 could end up owing $50,300 in state and federal taxes. ...
If his life had unfolded as he planned, Cris Collinsworth wouldn’t be spending this week in the Twin Cities, studying video of the Patriots and Eagles. He’d be in an office, poring over the details of the new U.S. tax code.
The former Bengals receiver began attending law school while still playing in Cincinnati [J.D. 1991, University of Cincinnati College of Law]. Armed with an accounting degree — and an affinity for business and tax law — Collinsworth saw his future in the legal world, even after a radio station asked him to be a fill-in host. ...
Collinsworth’s secondary mission is to share the “terrific story lines’’ of Super Bowl LII.
As he clicked off the list — Eagles quarterback Nick Foles’ comeback! LeGarrette Blount and Chris Long winning rings with the Patriots last year, now playing for Philly! — Collinsworth’s voice bloomed with excitement, in a way it probably wouldn’t have if he were discussing tax law.
“Believe me, I’m not longing for the days when I was going to become a lawyer,’’ he said, laughing. “Especially come tax time.’’
For such readers, I regret that you have not read this incredible fantasy adventure series. Not only because it’s good, but because references such as mine abound. Me nem nesa. A particularly amusing and creative spin comes from the otherwise staid ABA Section on Taxation. Each year the Tax Section puts out a “Tax Challenge” for both J.D. students and LL.M. students. This year’s Tax Challenge looks at some tax implications from GOT. Here’s how it starts:
Someone — and absolutely no one involved seems ready to say who — came up with an idea in 2012 for a patron to purchase 2,070 photos by the American portrait photographer Annie Leibovitz and then donate them to a museum in Canada.
For Ms. Leibovitz, who had a financial crisis several years earlier, the transaction meant she earned several million dollars.
And the donor, a Deloitte Canada partner who said he had bought the collection to honor his mother’s memory, stood to qualify for a generous tax deduction and recognition as an arts patron.
Four years later, though, a Canadian government panel that must sign off on the deduction is still balking at approving it, partly because the panel won’t accept a $20 million valuation for a collection that the donor purchased for just $4.75 million.
Billionaire Stephen Ross, owner of the Miami Dolphins, who thanks to a $200 million donation (largest in the history of the school) was described as Leader, Visionary, Philanthropist, Wolverine by the Universtiy of Michigan. ... Mr. Ross got his start in real estate based on his knowledge of federal tax garnered as a tax attorney for Coopers and Lybrand. ... I have to wonder whether the name of his flagship Related Companies is a tax geek joke.
The bare bones of the plan are that RERI, whose principal investor was Mr. Ross, bought an asset (call it "the thing") which it donated to the University of Michigan toward a $5 millon pledge that Mr. Ross had made. Under the gift agreement UM had to hold onto "the thing" for two years, then sell it. The amount that UM received would be credited to Mr. Ross's pledge. Round numbers RERI acquired "the thing" for $3 million. When it came time to sell it UM had it appraised at $6 million. UM sold it to a partnership for $2 million under pressure from Mr. Ross who threatened to count that amount towards his pledge, if they ended up getting less. How large was the charitable deduction taken by RERI, of which Ross was the principal investor? That would be $33,019,000.
Mr. Ross is a prominent philanthropist. It is tough to characterize this particular transaction as philanthropic as the claimed tax savings dwarf the amount out of pocket or the amount netted by the University of Michigan. You have to wonder to what extent University development officers knew what was going on. Was University of Michigan seeking charitable donations or renting its brand to a tax avoidance scheme?
The Boston Bruins ruled the world of professional hockey six years ago when they last won the Stanley Cup. But the team’s victory last week over the Internal Revenue Service will likely resonate far beyond the rink.
In Jacobs v. Commissioner, [148 T.C. No. 24 (June 26, 2017),] the owners of the National Hockey League’s Bruins argued the team should be able to deduct 100% of the cost of certain meals they provided to players and staff. Under current law, only 50% of the cost of many business meals is tax-deductible.
The hypocrisy really gets ratcheted up with John Oliver, the No. 1 darling to so many liberal anti-Trumpies, who regularly attacks GOP tax schemes as giveaways to the rich and detrimental to the poor. ...
For years, Oliver has criticized the estate tax, which opponents, in a smart linguistic move dreamed up by Frank Luntz, long ago labeled the “death tax”; and the tax code’s raft of loopholes that benefit special interests he identified as oil companies and hedge fund managers. Oliver even briefly established the bogus Our Lady of Perpetual Exemption to draw attention to tax-exempt status granted to churches and charities.
Back in July 2014, in an episode in which he lamented the Wealth Gap in America” (which has resulted in the richest one percent of Americans controlling 20 percent of annual income), Oliver said, “At this point the rich are just running up the score…What sets America apart is that we are actively introducing policies that disproportionately benefit the wealthy,” such as tax cuts and loopholes like trusts.
So it’s a little surprising to discover that just months before, Oliver had a tax attorney set up two revocable trusts, one for him and one for his wife, to hide the couple’s purchase of a $9.5 million Manhattan penthouse. Then he used a tax loophole created by Donald Trump himself back in the 1970s, when the current president was merely a prominent New York real estate developer and aspiring celebrity author.
Robots are taking human jobs. But Bill Gates believes that governments should tax companies’ use of them, as a way to at least temporarily slow the spread of automation and to fund other types of employment.
When pop star Michael Jackson died in 2009, weeks before a planned comeback tour, how much was the man in the mirror worth? The answer is far from black and white.
After coming to agreements on the value of some of the King of Pop’s more concrete assets in a legal fight that began four years ago, the estate’s executors are facing off with the Internal Revenue Service in U.S. Tax Court on Monday, primarily over the valuation of the singer’s name and likeness rights at the time of his death.
Depending on the outcome of the case, the estate could be on the hook for more than $500 million in taxes and $200 million in penalties, according to the IRS’s notice to the estate of its deficiency.
It's also almost tax time, and we should all remember who gets a piece of every bet: the IRS. The IRS gets a piece, whether sports betting, rolling the dice, playing cards, or betting on the ponies. All gambling winnings are taxable income in the eyes of the IRS. And the IRS doesn't allow you to automatically reduce your winnings by your losses either. Here are 7 tips for casual gamblers.
This week, Joe Kristan (CPA & Shareholder, Roth & Company (Des Moines, Iowa); Editor, Tax Update Blog) reminisces about a 1970 episode of The Mary Tyler Moor Show involving an IRS audit.
The bewitching glamor of the 1970s IRS.
The Mary Tyler Moore Show was a Saturday night childhood staple in the days of three TV channels. Through the miracle of Amazon, I revisited my 10-year-old viewing habits by downloading an episode from Season 1, 1040 or Fight, in which the heroine gets examined by the IRS.
The fictional tax world of 1970 is a fabulous place. For example, the IRS does evening house calls, scheduling the exam in Mary’s bachelorette pad at 8:03 p.m. The IRS agent shows up right on time with his calculator.
Over the past decade, Saban has created a modern football dynasty at Alabama, with four national titles in seven years and another possibly in the offing as it gears up for the annual showdown with archrival Auburn.
With considerably less fanfare, Saban has also built a business empire off the field, a collection of investments and projects that roughly traces the path of his 40-year career: A strip mall outside East Lansing, Mich. Apartment complexes around Houston, Texas. A pair of small apartment buildings in Baton Rouge, La. An upscale residential development in Tuscaloosa, Ala. And a growing collection of Mercedes-Benz dealerships. ... On a state disclosure form filed in May 2016, Saban listed 23 entities, some with names like Blitzmore LLC and First Down LLC, in which he or his wife, Terry—a licensed real estate professional—hold 5% or more of the stock, or serve as officers. ...
The art world feud between the actor Alec Baldwin and the gallery owner Mary Boone took another turn on Thursday when lawyers for Ms. Boone filed a motion in New York State Supreme Court in Manhattan accusing Mr. Baldwin of committing fraud by failing to pay sales tax on a painting he bought from her six years ago.
The filing comes just over a month after Mr. Baldwin sued Ms. Boone, asserting she had defrauded him in 2010 by promising him a painting, “Sea and Mirror,” by the artist Ross Bleckner, for which he had paid $190,000, but supplying him another, similar Bleckner painting, also called “Sea and Mirror.” ...
In the motion to dismiss Mr. Baldwin’s suit, her lawyer said that when Mr. Baldwin bought the Bleckner painting in 2010, the actor left instructions to deliver it directly to his home in California, and then almost immediately after it arrived on the West Coast, had the painting shipped back to his apartment in New York.
Chicagoans are abuzz with excitement over the possibility of a Cubs championship, which would be the first since 1908, and the legal academy is not immune. [David] Rudstein [(Chicago-Kent)] is just one of many professors at the city’s six law schools who are following the team with either sense of unbridled optimism or dread that it could fall apart at any moment. These are the Cubs, after all. ...
Ann Lousin, a professor at The John Marshall Law School in Chicago, had the unenviable task of teaching her three-hour sales transactions class during the first night of the World Series. Students still showed up, but by hour two she noticed pleading looks in their eyes. “You try to teach the Uniform Commercial Code while the World Series is going on,” she said the following morning. “It’s brutal.”
TaxProf 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.
TaxProf 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:
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.