Whitney Houston's Estate Disputes IRS Valuation of IP Rights

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By Erin McManus

May 25 — Whitney Houston's estate says the royalties, residuals and the value of the late performer's image are worth much less than the IRS determined ( Estate of Houston v. Commissioner, T.C., No. 12098-16, petition filed 5/23/16 ).

In a petition filed with the U.S. Tax Court on May 23, the estate challenged a $7.92 million deficiency and $3.17 million in penalties assessed by the Internal Revenue Service after it determined that the estate had underreported the value of intellectual property rights by $22.6 million.

Increases Challenged

According to the petition, the IRS erred by increasing royalties from catalog albums by $9.1 million and royalties from a new album by $440,989. The estate said the IRS further erred in increasing the value of other rights as follows:

  •  digital performance rights royalties by $1.36 million to $2.79 million;
  •  motion picture and television residuals by $33,699 to $165,599;
  •  publicity rights by $11.5 million to $11.7 million; and
  •  royalties from other sources by $53,066 to $189,028.


The estate also argued that the IRS erred by failing to decrease the value of Houston's name and likeness and merchandising royalties by $33,699 to $165,599.

The petition said that valuation reported on the estate tax return was accurate and used valuations by qualified appraisers with “substantial expertise valuing such assets for the entertainment industry.”

Greenberg Traurig LLP represents the estate.

To contact the reporter on this story: Erin McManus in Washington at emcmanus@bna.com

To contact the editor responsible for this story: Brett Ferguson at bferguson@bna.com