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The Tax Lives of Performing Artists
Performing artists are everywhere. Whether you’re a fan or indifferent, they’re tough to ignore. They color our world with print, broadcast, and social media coverage. We have actors, musicians, newscasters, and podcasters performing live, streaming online, captured on film/radio/television, and just about everywhere in an expanding online universe. We celebrate their triumphs, empathize with their trials, feel shocked at their gaffes, and grieve for and with them. We may not think we have much in common with performers, but we do have one commonality: We’re all taxpayers! A performer’s life may seem glamorous, but it’s hard work and not always financially predictable. The tax lives of performers are complicated. They have income and expenses, but with many twists and peculiarities. Twists and peculiarities can make it both interesting and complex when navigating the Tax Code, but performing artists need tax reduction, too. Tony Nitti said, “It has to suck to make your living as an artist.” But paying taxes as an artist doesn’t have to suck when you have a great tax plan. To read more about the unique tax planning opportunities available to performing artists, continue reading.
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CURRENT EDITION
Editor’s Pick: Tax Planner Faces Malpractice Claims Over Decades-Old Tax Advice—What Went Wrong?
In a case that every tax professional should take note of, the prominent law firm Sidley Austin LLP finds itself defending against claims that it provided faulty tax advice over two decades ago, leading to massive IRS liabilities for a family. The plaintiffs, the Cáceres family, are seeking to recover $7 million after settling with the IRS, claiming Sidley’s advice on a complex asset liquidation set them up for disaster. The kicker? The lawsuit was filed over 25 years after the advice was given. So, how are the plaintiffs still able to pursue the case? It all boils down to a claim of fraud—and how that could toll the statute of limitations.
Navigating IRS Penalty Relief and Forgiveness
Yes, the IRS does forgive some tax penalties. The IRS refers to this forgiveness as penalty abatement. Abatement is the act or process of reducing or removing something. In this case it is removing or reducing a penalty. But penalty forgiveness is not a blanket offer that everyone qualifies for the way the radio ads make it seem. There is a process that the IRS has for requesting and granting abatement. It is up to the taxpayer to prove that they qualify for abatement. That’s where you come in.
From The Government And Not There To Help You
The story of James J. Maggard has some interesting and possibly valuable lessons. The one that strikes me as particularly important is that it makes it crystal clear that disproportionate distributions contrary to a corporation’s governing documents will not blow its S election. That does not mean that disproportionate distributions are just fine and that you don’t need to address them. There is a practical lesson about being careful who you take on as fellow shareholders. And there is another slightly odd lesson, that almost makes me want to create a new law of tax planning: Don’t deliberately involve the IRS in your business disputes. Their job is not to help you.
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Think Outside the Tax Box provides tax reduction strategies along with practical
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