Christopher Weeg (J.D. 2015, Florida), Starting with the [Tax] Man in the Mirror: Asking the IRS to Change its Ways of Valuing Postmortem Publicity Rights (Second Place, 2014 Federal Bar Association’s Donald C. Alexander Tax Law Writing Competition):
Legal issues often arise at the intersection between a new legal right and an existing legal framework. In the estate tax world, the relatively new right of publicity clashed with the well-settled statutory language defining the value of a gross estate. In 1994, the court in Estate of Andrews v. United States, addressed the “issue of first impression” of the value of an author’s name as part of her estate for federal tax purposes. Andrews’ ruling demonstrated that publicity rights are (1) includible in a decedent’s gross estate and (2) valued based on a hypothetical sales transaction between a buyer and a seller.
Even after Andrews, the inclusion and valuation of these descendible rights for federal estate tax, as well as the liquidity issues they pose to cash-strapped estates, have continued to be debated by highly regarded scholars and practitioners. Mitchell M. Gans, Bridget J. Crawford, and Jonathan G. Blattmachr advocated for a legislative solution to this problem [Postmortem Rights of Publicity: The Federal Estate Tax Consequences of New State-Law Property Rights, 117 Yale L.J. Pocket Part 203 (2008)]. They proposed a modification to state law, whereby a decedent’s publicity rights automatically pass to a designated statutory heir and, thus, are excluded from the gross estate.6 In response to the proposal, Joshua C. Tate argued that the publicity rights, through the supposed restriction on testamentary control by automatic vesting in the statutory heir, are nonetheless includible in a decedent’s estate because the celebrity enjoyed a property interest in them at the date of death [Marilyn Monroe’s Legacy: Taxation of Postmortem Publicity Rights, 118 Yale L.J. Pocket Part 38 (2008)]. Following Tate’s article, Gans, Crawford, and Blattmachr defended their position that post-death control is a requirement for estate tax inclusion [The Estate Tax Fundamentals of Celebrity and Control, 118 Yale L.J. Pocket Part 50 (2008)]. Tate replied that, in effect, their proposal was an estate tax free lunch for celebrities and, thus, did not serve the broader policy justifications and normative goals of the federal estate tax [Immortal Fame: Publicity Rights, Taxation, and the Power of Testation, 44 Ga. L. Rev. 1 (2009)].
October 3, 2014 in Scholarship, Tax, Weekly Student Tax Note Roundup | Permalink
| Comments (0)