Rob Lowe’s Tax Appeal Finalized at California Tax Board

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By Laura Mahoney

Rob Lowe’s and his wife’s income tax appeal, which spiraled into allegations of anti-Semitism, ended when a California tax board adopted a written decision explaining its 2016 ruling to grant the celebrity couple $12.1 million of the $13.5 million basis they claimed in their $25 million home.

The five-member elected State Board of Equalization voted 4-1 on Jan. 25 to approve the 5-page written explanation of its earlier decision four months after rejecting a request from Lowe and Sheryl Berkoff to rehear their case to clarify whether the final amount included capitalized interest. The SBOE is required to explain its rulings in writing if the amount at issue in an appeal is $500,000 or more.

With the administrative appeal complete, Lowe and Berkoff are free to pursue the case in state court. Their attorney, Mark Bernsley, didn’t respond to a request for comment about the final board action.

Anti-Semitism Alleged

The Lowes’ appeal proceedings before the board included allegations of anti-Semitism and biased statements from board member Jerome Horton (D). Lowe asked that Horton not participate in the case because of anti-Semitic remarks Horton allegedly made to Berkoff, who is Jewish, during a private meeting in 2015. Horton also publicly questioned whether the board’s action in February 2016 granting most of their appeal was legal.

Horton continued to participate in the case, and he seconded the motion from member Diane Harkey (R) to approve the written decision. Deputy Controller for Taxation Yvette Stowers, representing State Controller Betty Yee (D), voted against its approval, saying she also voted against the underlying decision and wanted to be consistent.

In the written decision, the SBOE said it found “an abundance of evidence” to establish the adjusted basis in the home in Santa Barbara of $12.1 million. The Franchise Tax Board had argued the couple’s basis was closer to $7 million, and sought more than $900,000 in additional tax. A final tax bill will reflect the adjusted basis the board adopted.

To contact the reporter on this story: Laura Mahoney in Sacramento, Calif. at LMahoney@bna.com

To contact the editor responsible for this story: Ryan C. Tuck at rtuck@bna.com

For More Information

Text of the board's explanation is at http://src.bna.com/lJY

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