Capitol Alert

Actor Rob Lowe wins tax case, more or less

Actor Rob Lowe sits with former Secretary of State George Shultz, right, and Schultz’s wife, Charlotte, during the inauguration of California Gov. Arnold Swarzenegger for a second term in Sacramento in 2007. A state tax board recently issued a decision in a Lowe tax appeal.
Actor Rob Lowe sits with former Secretary of State George Shultz, right, and Schultz’s wife, Charlotte, during the inauguration of California Gov. Arnold Swarzenegger for a second term in Sacramento in 2007. A state tax board recently issued a decision in a Lowe tax appeal. Sacramento Bee Staff Photo

Actor Rob Lowe has prevailed – more or less – in his long-running dispute with state tax collectors over capital gains on the 2005 sale of his Montecito home.

Acting on Lowe’s appeal of a Franchise Tax Board decision, the state Board of Equalization decided last month that Lowe and his wife, Sheryl Berkoff, owed income taxes on $13 million-plus in gain on the $25 million sale, rather than the $18 million that the Franchise Tax Board had calculated.

Lowe had said the FTB had not given enough credit for extensive remodeling on the home, which would have reduced the underlying basis for the tax calculation. But many records on the construction work were missing, so it became a battle over differing estimates with experts on both sides.

Lowe and Berkoff personally appeared before the board to plead his case in August. He told members, "I take this very seriously. I've been paying my taxes in this state since I was 15 years old ... and it's a privilege,” adding that he was seeking “common sense and fairness and expediting.”

The Board of Equalization didn’t give Lowe everything he sought, increasing his capital gains number by about $2 million. But the FTB also withdrew a $178,671 penalty it had assessed for failure to submit information.

The outcome of the case was reported in the California Taxpayers Association’s weekly bulletin.

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