Sticky Copyrights: Discriminatory Tax Restraints on the Transfer of Intellectual Property

Abstract

The focus of this article is the federal estate and gift tax treatment of copyright termination rights. The right of a creative individual to terminate prior copyright transfers serves to protect against economic exploitation. Once a copyright’s value has been established in the marketplace, the author (or the author’s heirs) enjoy a 'second look' at the gift, sale, license or other transfer of a copyright. But copyright termination rights - intended to enhance the economic well-being of authors and artists - undermine estate-planning strategies available to owners of other types of property. There is no policy justification for such discrimination, and so this article proposes legislative changes that would level the playing field for wealth transfer tax purposes.

Keywords: copyright, estate taxation, gift taxation, termination rights, intellectual property, tax, wealth transfer tax, gift, estate, termination, heirs, family, artist, author, creative individual, estate planning, wills, testation

JEL Classification: K19, K34