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By Laura Mahoney
Dec. 17 — The State Board of Equalization rescinded its November vote in favor of actor Rob Lowe and his wife, Sheryl Berkoff, in their dispute over taxable gain on the sale of their $25 million home, setting them up for an even larger victory when the board votes again in February.
The members voted 3-2 on Dec. 16 to rescind their 5-0 November vote setting the basis in the home sale at $11.36 million because of confusion about which motion they approved. The basis amount approved in November was lower than the $13.5 million the celebrity couple claimed, but more than the $7 million the Franchise Tax Board said it should be (223 DTR H-1, 11/19/15).
SBOE member Fiona Ma (D) said it was her intention, and the intention of the majority of the board, to set the basis at $12.1 million by disallowing capitalized mortgage interest. The amount approved in November also disallowed $739,000 in capitalized construction loan interest.
The board voted 3-2 to rescind the vote and take it up again in February, without going as far as to reopen the hearing on the case or to take new evidence. Members said their discussion leading up to the November vote was confusing.
“There were a lot of numbers flying around,” said member Diane Harkey (R), who made the November motion.
Harkey, Ma and member George Runner (R) voted to rescind the vote. Chair Jerome Horton (D) and Deputy Controller for Taxation Yvette Stowers, representing State Controller Betty Yee (D), opposed the move.
Stowers said a letter has already been sent to the couple informing them of its decision, and rescinding it would run afoul of the board's standard practices. If Lowe and Berkoff disagree with the outcome, they have the option to file a petition for rehearing before the board.
“I was clear on what I was voting for,” Stowers said.
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