George M. Cohan's Tax Triumph: The Rise and Erosion of the Cohan Rule - 03-01-26

The Cohan rule is named for George M Cohan. George Michael Cohan (1878 – 1942) was a theatrical producer. Cohan was appealing a net deficiency totaling $238,102.28 from 6 returns from 1918 to 1923. One was for a short period as he switched to a June year end. The net deficiency would be roughly $3.9 million in today’s dollars.There were several issues. George had excluded income that had gone to his mother under an alleged partnership agreement. There were royalties excluded as belonging to someone else. There was a loss on an annuity contract. The partnership had deducted $10,000 to the Producing Managers’ Association to fight against actor’s unionizing. There was a deduction of $150,000 to secure management and booking rights to a theater. As an alternate argument, maybe the $150,000 could be depreciated. Were luxury taxes deductible? There was also an issue about the tax computation for the fiscal years due to rate changes.Listen in to learn about this fascinating case and historic tax decision and what it means today!This podcast is meant for entertainment purposes only. For the more thorough, complete, and accurately written version of this article which includes citations, visit us at http://www.tottb.tax