Here's Something Else for Musicians and Teachers to Worry About

There are a number of sound  reasons to dislike the new proposed tax bill passed by the House of Representatives recently.  As the commentators have noted, the bill eradicates many of the tax  deductions we have grown to know and love (except for charitable donations, property taxes and mortgage interest).

However, one of the lest comprehensible elements  of this new bill is that it eliminates employee deductions for unreimbursed expenses.  This means that for musicians, who are also considered W‑2 employees, they will no longer be able to deduct the cost of their instruments and gear as well as the cost of union dues, home office expenses, travel expenses and  mileage or uniform expenses.  The kicker here is that none of this applies to independent contractors – 1099 workers who itemize their expenses on Schedule C.  So if you're an independent contractor you're okay, if you're a W‑2 employee, you're screwed.  It is not hard to recognize the irony here.  As anyone who has wrestled with this knows, the IRS has a very specific test to determine whether a person is acting as an independent contractor or an employee and it doesn't take much to classify a musician as an employee for tax purposes.  Of course  many professional musicians and others involved in the entertainment industry find that they have both W‑2 income and independent contractor income.  Will there be a push to classify more of this income on the 1099 side of the ledger?  I think so.

As an aside, having been a part-time educator, being married to a full-time educator and having some experience with our public and private schools, it seems patently evil to deny teachers the right to deduct their job related  supplies and expenses. From  the books and movies my wife buys to enrich her college students' learning,  to one of my daughter's elementary school teachers who I fondly remember bought all of the musical instruments used by his students (because the school district either couldn't or wouldn't pay for them) teachers make a great sacrifice for their jobs.  Congress shouldn't penalize them.

Thanks to the website financeformsucians.com-a great resource.

Orville Almon, Jr.

I wanted to acknowledge the passing of Orville Almon, Jr.  There are very few people I consider to be true mentors in this world but Orville would be at the top of the list.  I learned so much about entertainment law and the business of law from him both as the person  on the other end  of the phone line  and during the 4 years I worked at his law firm,  Zumwalt, Almon & Hayes.  As another lawyer friend remarked, "He taught a lot of us how to dot the i's and cross the t's." That is so true.   I would venture to say that the majority of my "stock" forms came from Orville (and I'm sure I'm not the alone in this).   When I worked with Orville I was impressed by  his discipline.  He came into the office at nearly the same time every day and just cranked.  That's how you get stuff done.

More importantly, Orville was kind.  I noticed this first as a young lawyer.  He was friendly and courteous and never seemed to be pursuing an agenda – other than to get the deal finished.  When we spoke,  we had real conversations. I am sure we were on opposite sides of the political spectrum but since he was a vet, he earned the right to his opinions. 

Unfortunately, I had not spoken to Orville in a while.  I think the last thing we worked on together was a dispute between two equally eccentric clients and I kind of enjoyed picturing Orville's frustration with the inanity of the whole thing.

He was truly one of the greats  and I will miss him.

Prince

I am still thinking about the strange articles I read back in June and July concerning Universal Music Group seeking court approval to nullify a multi-million dollar deal it made with Prince's estate for the rights to release certain of the late great musician's recordings.  It turns out that Universal claims that the expiration dates of Prince's agreements with other entities were somehow misrepresented.  From what I have read, it seems that no one involved in the deal disputes this and rather than alleging malfeasance, it looks as if this was the end result of Prince's very confused estate.  The Probate Judge overseeing the case called it "personal and corporate mayhem" according to the New York Times.  You can read the pleadings in the case here: http://www.mncourts.gov/InReTheEstateofPrinceRogersNelson.aspx

One does not have to be a probate lawyer to figure out that a good chunk of the Estate is getting eaten up in legal fees.

As so many commentators have noted,  it is shocking (and frankly somewhat sad) that an artist who seemed to be so in control over every aspect of his career could have been so careless in dealing with his legacy.  No will, no trust, just a mythical vault full of unreleased material. 

The point for every artist and song writer is to first of all make sure you have a will in place that makes some reference to the disposition of your intellectual property and second, make sure you either have a family member or a close trusted advisor who can help navigate through the maze of record deals, publishing deals, licensing deals, performing rights organizations and the new nightmare that is digital rights. 

Problems will arise in the best scenarios, and it is not at all unusual for heirs and beneficiaries not to get along with executors and administrators but it's so must easier to deal with this situation when the deceased made his or her intentions clear.