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MYTH 31
STEINBERG v UNITED STATES

REGISTERING IP IS ONLY STEP ONE AND DOES NOT REDUCE ESTATE TAX

Key Concept: Intellectual property ownership
Sub-Concept: Registration does not remove IP from the taxable estate
IRS or Law Link: IRC Section 2031
https://www.law.cornell.edu/uscode/text/26/2031
Case Study: Steinberg v United States

Summary:

Registering trademarks or copyrights does not shift ownership.
Personally owned IP stays in your taxable estate.
IRS includes the value of future royalty streams.

Key Takeaway and Action Steps:
Assign IP to a trust or entity where control is truly transferred. Registration protects ownership but not taxes.

Hypothetical:
An influencer registers trademarks but keeps personal ownership. IRS taxes the entire portfolio and projected royalties.

Tags: #IntellectualProperty #EstateTax

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MYTH 32
ESTATE OF PRINCE

LACK OF PLANNING CAN FREEZE IP RIGHTS AND ROYALTIES FOR YEARS

Key Concept: Celebrity estate planning
Sub-Concept: Intangible property must be assigned with documents
IRS or Law Link: IRC Section 2033
https://www.law.cornell.edu/uscode/text/26/2033
Case Study: Estate of Prince (2016)

Summary:

No will or trust resulted in years of legal battles.
Royalties and licensing income were frozen.
IRS and heirs fought over valuation.

Key Takeaway and Action Steps:
Document IP ownership. Assign royalties to a trust. Avoid probate courts for creative assets.

Hypothetical:
A musician leaves no estate plan. Streaming income stops for years while courts determine ownership.

Tags: #IPPlanning #CelebrityEstates

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MYTH 33
THOMPSON v COMMISSIONER

PERSONAL PATENTS ARE NOT AUTOMATICALLY LICENSED TO YOUR BUSINESS

Key Concept: Patent ownership
Sub-Concept: Business must license IP formally
IRS or Law Link: IRC Section 2036
https://www.law.cornell.edu/uscode/text/26/2036
Case Study: Thompson v Commissioner

Summary:

A patent owned personally was treated as a taxable estate asset.
The business using the patent had no formal license.
IRS valued the patent at its commercial use value.

Key Takeaway and Action Steps:
Create written licensing agreements. Assign patents to trusts or holding companies. Ensure business use is documented.

Hypothetical:
A tech founder’s product uses a personal patent. IRS taxes the patent plus all projected licensing revenue.

Tags: #PatentLaw #EstateTax

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MYTH 34
POWELL v COMMISSIONER

AN LLC WILL NOT PROTECT YOUR IP IF YOU RETAIN CONTROL

Key Concept: Retained control
Sub-Concept: Control triggers estate inclusion
IRS or Law Link: IRC Section 2038
https://www.law.cornell.edu/uscode/text/26/2038
Case Study: Estate of Powell

Summary:

IP placed in an LLC remained taxable.
Owner controlled voting and licensing decisions.
IRS ruled it was a “paper-only” transfer.

Key Takeaway and Action Steps:
Separate ownership from control. Do not manage IP after you transfer it. Align structure with tax rules.

Hypothetical:
A creator forms an LLC for trademarks but still approves every license. IRS includes the full value in the estate.

Tags: #IPStructure #RetainedControl

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MYTH 35
ESTATE OF GERMAN

A REVOCABLE TRUST DOES NOT REMOVE IP VALUE FROM YOUR ESTATE

Key Concept: Trust classification
Sub-Concept: Revocable trusts offer no estate tax protection
IRS or Law Link: IRC Section 2038
https://www.law.cornell.edu/uscode/text/26/2038
Case Study: Estate of German

Summary:

Revocable trust IP is still taxed.
Retained power equals ownership for the IRS.
Many creators confuse probate planning with tax planning.

Key Takeaway and Action Steps:
Use irrevocable or non-grantor trusts for IP. Keep personal control limited. Document the transfer properly.

Hypothetical:
An artist places copyrights in a revocable trust. IRS taxes the copyright portfolio as part of the estate.

Tags: #TrustPlanning #IPTaxation

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MYTH 36
THE MICHAEL JACKSON ESTATE

UNDERVALUING IP CAN TRIGGER MASSIVE IRS DISPUTES

Key Concept: IP valuation
Sub-Concept: Royalty potential impacts estate valuation
IRS or Law Link: IRC Section 2031
https://www.law.cornell.edu/uscode/text/26/2031
Case Study: Estate of Michael Jackson v Commissioner

Summary:

The estate valued IP extremely low.
IRS valued it at hundreds of millions.
Valuation battles lasted over a decade.

Key Takeaway and Action Steps:
Use credentialed IP valuators. Document income streams. Avoid undervaluing creative assets.

Hypothetical:
An entertainer’s estate values their likeness at 5 million. IRS claims it is worth 80 million based on future licensing potential.

Tags: #IPValuation #EstateTax

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MYTH 37
ESTATE OF CECIL v COMMISSIONER

THE IRS WILL ASSIGN VALUE TO YOUR TRADEMARKS EVEN IF YOU DO NOT

Key Concept: Trademark valuation
Sub-Concept: IRS can value unreported IP
IRS or Law Link: IRC Section 2031(b)
https://www.law.cornell.edu/uscode/text/26/2031
Case Study: Estate of Cecil v Commissioner

Summary:

Trademark rights were not formally valued.
IRS assigned a high valuation using comparables.
Estate was taxed at a higher value than expected.

Key Takeaway and Action Steps:
Document trademark income potential. Update valuations regularly. Maintain licensing records.

Hypothetical:
A small apparel brand never valued its trademarks. IRS assigns a seven-figure value based on social media reach and sales.

Tags: #TrademarkLaw #IPTax

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MYTH 38
ESTATE OF STEINBERG

FUTURE ROYALTIES CAN BE INCLUDED IN YOUR ESTATE

Key Concept: Royalty valuation
Sub-Concept: Future income streams are taxable
IRS or Law Link: IRC Section 691 (Income in Respect of a Decedent)
https://www.law.cornell.edu/uscode/text/26/691
Case Study: Estate of Steinberg

Summary:

IRS valued future royalty income as part of the estate.
IP expected to produce income was taxed.
Estate had to estimate future licensing revenue.

Key Takeaway and Action Steps:
Plan IP transfers while alive. Freeze royalty values. Use trusts or business entities for IP succession.

Hypothetical:
An author’s upcoming book release results in projected royalties being included in the estate.

Tags: #RoyaltyTax #EstatePlanning

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MYTH 39
CHURCH v UNITED STATES

INFORMAL GIFTS OF IP ARE IGNORED BY THE IRS

Key Concept: Gift rules
Sub-Concept: IP gifts require formal transfer documents
IRS or Law Link: IRC Section 2511 and Section 2701
https://www.law.cornell.edu/uscode/text/26/2511
Case Study: Church v United States

Summary:

Informal or verbal IP transfers were rejected.
IRS taxed the entire IP portfolio as still owned.
Lack of documentation destroyed the gift.

Key Takeaway and Action Steps:
Use written assignments. Record transfers with USPTO when applicable. File Form 709 for IP gifts.

Hypothetical:
A photographer “gifts” a portfolio to a child but never signs a transfer. IRS taxes the entire catalog.

Tags: #GiftTax #IPTransfer

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MYTH 40
THE WHITNEY HOUSTON ESTATE

HANDWRITTEN OR INFORMAL WILLS CAN CREATE CHAOS

Key Concept: Estate planning formalities
Sub-Concept: Handwritten documents lack legal clarity
IRS or Law Link: IRC Section 2031 (valuation) and UPC Section 2-502
https://www.uniformlaws.org/projects/probatecode
Case Study: Whitney Houston Estate

Summary: