K. Slaughter, 2019 T. C. Memo. 65, filed 6/4/19, claims she is a “brand author.” That doesn’t mean someone who invents the name and attributes of merchandise. K is an author whose name alone sells books; the book buyer doesn’t ask by title. The book buyer wants “the latest Slaughter.”

Judge Wells has to deal with eight (count ‘em, eight) lawyers, three for K and five for IRS, none of whom cites to Sergio Garcia or Retief Goosen (see my blogpost “Icon vs. Iceman, 3/15/13).

The split, of course, is between earnings from trade or business (K writes books), and earnings as a “brand author,” one whose persona adds value to words on paper. The earnings from trade or business of writing attract SE, but somehow the persona component is like an investment which throws off a non-business increase in wealth. Thus spake K’s trusty CPA, with whom K had worked for thirty years, and who had a plethora of qualifications. So no chops.

K had media coaches, did events, and promoted herself. “Petitioner’s promotional activities and writing have created a very successful brand and body of work.  In petitioner’s case, her brand includes her name and likeness as well as her reputation, goodwill, and existing readership. Book buyers walk into book stores and request petitioner’s books using her name rather than the title.  Petitioner has developed good relationships with booksellers and librarians, which help to sell her books.  She also maintains contact with her readership through social media, websites, and a newsletter.” 2019 T. C. Memo. 65, at p. 6.

So the question is whether, pursuant to the publishing contracts into which K entered over the years, the income she derived had a sufficient nexus with writing to make it subject to SE, as part of K’s trade or business.

K’s deductions for her promotional endeavors showed up on Schedule C.

But ultimately, no books, no brand. Perhaps a more carefully drafted publishing contract might differentiate between royalties for brand enhancement, and just plain literature.

And tell ‘em Sergio Garcia sent ya.

Edited to add, 6/5/19: An e-mail exchange with counsel for K Slaughter informs me that both IRS and said counsel cited Sergio Garcia, but Judge Wells didn’t discuss the case. Maybe so K Slaughter’s team might consider reconsideration.

Edited to add, 8/3/21: Thanks to my colleague Peter Reilly, CPA, for catching 11 Cir’s affirmance of Judge Wells’ opinion, and passing along the news. 11 Cir goes off on “trade or business”; the book writing and brand promotion are inseparable.