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Author's Posthumous Fame Is Taxable
by A.J. Cook Source: The Commercial Appeal [Final Edition], 13 February 1995, pB.4 A.J.'s Tax Fables The Internal Revenue Service said Virginia C. Andrews's name was worth $1.2 million - after she died. For the first time, a U.S. court decided whether a deceased person's name had taxable value. Dark Angel, Flowers in the Attic and Petals on the Wind - fans of best-selling author V.C. Andrews read them all. The president of Simon & Schuster's Consumer Group said her books brought millions of readers into stores after each new release. Andrews was the undisputed master of the children-in-jeopardy literary genre. Each novel featured a teenager who overcame family adversity and faced a hopeful future. The internationally recognized author signed a contract for a $3 million advance on her next two books shortly before she died. Surprisingly, her obituary received little notice in the press. These two facts gave her publisher, who had not signed the contract, a novel idea. Why not use her name with a ghostwriter mimicking her style of writing? The publisher chose an obscure author of horror stories. Before starting, the writer read her books, entered the texts in his computer and analyzed her style and character development. Meanwhile, things were tense at the publisher's office. They had questions like these: "Can we hoodwink the public? Will a failure end the sale of her other books?" The answers came a week after releasing the new book. Garden of Shadows was a smash hit. Four books followed, all commercial successes. Only then, four years after her death, did the publisher confirm her demise. The announcement led readers to believe Andrews substantially wrote the stories before she died. Amid this literary intrigue, the Andrews estate filed its tax return. The IRS demanded that the estate include the Andrews name as an asset. It valued it at $1.2 million. The judge, without precedence to guide him, agreed that, because she had loyal readers, her name had taxable value. This $1.2 million, however, was too high because the estate took a major risk - rejection by the public. This would have hurt the sales of books Andrews had written. Weighing these and other factors, he set the value of her name at $700,000. The case leaves unanswered questions. Now will the IRS automatically add the value of a name to the estate of every author? What about entertainers - or politicians? The moral: What's in a name - estate taxes? A.J. Cook, lawyer and accountant, is counsel with the law firm of Harris, Shelton, Dunlap and Cobb, L.L.P.C.
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