Federal Tax News

Brand is Taxable

Your Brand

Generally, income generated by a self-employed taxpayer’s trade or business is subject to self-employment tax. One successful author received royalty income from publishing contracts for her writing, her name and her likeness. She claimed that amounts received for her name and likeness (her “brand”) were investment income, and not subject to self-employment tax. Her brand, she said, is who she is and that she’s “not in the trade or business of being herself.” The IRS maintained that the payments were derived from her business, and therefore subject to self-employment tax. The U.S. Tax Court agreed, finding her brand was part of her business because it had commercial value. (Slaughter, TC Memo 2019-65)