In the entertainment industry, complex deals are often the result of opaque contracts that use terms interchangeably. It is not unusual for these contracts to imply a preferential income, estate, or gift taxation treatment for entertainment assets that is simply not applicable. The Internal Revenue Code does not make it any easier to decipher the treatment of entertainment-related assets.
Attorneys thus need to be aware of some of the benefits and burdens inherent in entertainment assets and other income streams—such as participations, residuals, and royalties—as they relate to income, estate, and gift taxation, and especially as they bear on various tax planning techniques.
Click here to view the full text of this article.