A recent decision in the Eleventh Circuit Court of Appeals may have tax implications for talent who conducts significant endorsement or brand ambassador activities. Generally, endorsement deals often have two components: (1) endorsement services (e.g., public appearances, social media) and (2) licensing the talent’s name and likeness (e.g., for use on print and digital advertisements). In other relevant tax contexts, income attributable to endorsement services has been treated as services income, while income attributable to licensing of one’s name and likeness has been treated as a royalty. See, e.g., Goosen v. Comm’r, 136 T.C. 547 (2011) (holding that income arising from licensing one’s name and likeness constitutes royalty income for purposes of determining U.S. source income). In the limited context of determining whether income is qualified business income for purposes of IRC 199A, however, income attributable to licensing one’s name and likeness is treated as disqualified service income. But is name and likeness income subject to self-employment tax?

Continue Reading Should Talent Pay Self-Employment Taxes on Income Associated with their “Brand”?

Taxpayers who owe quarterly estimated taxes must make such payments by April 15,2021, notwithstanding the extended filing deadline this year. On March 17, 2021, the IRS announced a one-month extension of the tax filing deadline for individuals from April 15 to May 17 of this year. The rationale, per IRS Commissioner Chuck Rettig, was that

Many celebrities balance maintaining their brand by staying in the public eye with privacy in their personal life. A new California law, however, has some business managers and celebrities concerned about maintaining their privacy. With little fanfare, Governor Newsom signed into law Senate Bill 592 (the Bill) on September 28, 2020, which may raise eyebrows this year as business managers and taxpayers navigate the 2020 tax reporting season. Specifically, the Bill requires the California Franchise Tax Board (FTB) to revise the California resident income tax return form to include a line item for the taxpayer’s address of their principal residence and their county of principal residence. In the past, high-profile taxpayers often used their business manager’s address when filing tax returns, to maintain privacy and security. The Bill, however, takes effect this year, so that California residents must now disclose the address of their principal residence on their 2020 California income tax returns.

Continue Reading New Disclosure Law for California Taxpayers: A Huge Breach of Privacy? Probably Not.

On December 27, 2020, President Trump signed into law the $2.3 trillion Consolidated Appropriations Act, 2021 (the Act). At over five thousand pages, the Act is an amalgamation of numerous legislative measures, including further stimulus measures to combat the coronavirus pandemic, as well as an omnibus spending bill. Below is a discussion of some of the tax provisions in the Act that may impact the entertainment industry.

Continue Reading Impactful Tax Changes for the Entertainment Industry

The federal government’s latest spending bill, the Consolidated Appropriations Act (Act), included $284 billion of renewed funding for the Paycheck Protection Program (PPP) and a newly established $15 billion grant program for “Shuttered Venue Operators” (described below). Congress also modified the PPP in numerous ways that should benefit businesses who receive PPP funding.

Under the Act, the allowable uses for PPP funds that will be forgiven was broadened to include, among other expenses, costs associated with protecting workers in compliance with federal health and safety guidelines and property damages caused during public disturbances in 2020 that were not covered by insurance. Additionally, the Act created a simplified loan forgiveness process for PPP loans under $150,000. Lastly, Congress clarified its original intent to allow taxpayers to deduct expenses paid with tax-free, forgiven PPP funds.


Continue Reading New COVID-19 Relief Bill Reboots Paycheck Protection Program and Provides Grants to Hardest Hit Businesses in Entertainment

Although many businesses providing services in the field of performing arts are not eligible for the qualified business income (QBI) deduction, some entertainment businesses that do not fall in this category have taken the position that they do qualify.  Recent indicators from the IRS, however, suggest that taxpayers claiming the QBI deduction may be subject to increased audit risk in the near future.
Continue Reading Taxpayers Claiming QBI Deduction May Face Increased Audit Risk

Employers of U.S. residents who are remaining in Europe while projects are shut down because of the COVID-19 pandemic might benefit from a new taxpayer-friendly approach. The new protocol forgives days spent abroad because of COVID-19 travel restrictions, as part of a foreign-country corporate residency analysis.

On March 23, 2020, the Irish Revenue Commissioners (Irish Revenue) issued Revenue eBrief No. 46/20, which announced Irish Revenue will adopt a taxpayer-friendly approach to corporate residency determinations for companies whose employees, directors, service providers, and/or agents are unable to travel as a result of recent government-imposed travel restrictions. This guidance came at the same time as similar announcements by the Organization for Economic Cooperation and Development (OECD) and several other countries. In particular, on May 20, 2020, and May 25, 2020, France and Germany, respectively, announced bilateral agreements with neighboring countries to ignore the presence of employees who must work outside of their country of employment due to government-imposed travel restrictions. Taken together, these policies suggest a universal willingness among international taxing authorities to quickly respond to the COVID-19 crisis and accommodate taxpayers as they navigate the evolving commercial realities of their businesses.
Continue Reading Working on a Production in Europe? Take Note of New Taxpayer-Friendly Residency Approaches in Light of the COVID-19 Crisis

This article has been published in the September/October edition of Probate & Property.


With much of the entertainment industry currently at a standstill as a result of rampant production shutdowns, now may be a good time for those who are finding themselves idle to use this extra time to take stock of their financial situation and plan for the future.  Economic factors, such as the current depressed financial markets and historically low interest rates, have combined to impact and drive a variety of estate planning techniques.  While the current uncertain environment may – understandably – cause many to hesitate to engage in a substantial family gifting program, these economic conditions present a unique opportunity for families to pass a significant amount of wealth to younger generations with minimal transfer tax exposure.  We recommend contacting your Venable Wealth Planning counsel to discuss the techniques that may provide the most viable opportunity for your particular circumstances.

This post provides a high-level discussion of those estate planning techniques that present the greatest potential for an upside when implemented during a state of declining financial markets combined with historically low interest rates.
Continue Reading Estate Planning Opportunities for the Entertainment Industry in a Low Interest Rate Environment

For many entertainment businesses, the recent congressional stimulus has proved to be a smash hit. The IRS, however, is a tough critic and is looking to claw back some of that money by disallowing deductions associated with such stimulus funds. On April 30, 2020, the IRS released Notice 2020-32 (the Notice), which provides some clarity regarding the tax treatment of loans received pursuant to the Paycheck Protection Program (PPP). Specifically, the Notice clarifies that any expenses paid with proceeds from forgiven PPP loans are not deductible for federal tax purposes. In an earlier post, we raised the question of whether such a deduction would be allowed; now the IRS has answered, but it may not get the last word on this issue.
Continue Reading No Deductions (Yet) for Business Expenses Paid with Paycheck Protection Loans