The state Board of Equalization, revisiting an earlier decision on an income tax case involving Hollywood star Rob Lowe, has decided on a split vote to further reduce Lowe’s tax bill on the sale of his Montecito home 11 years ago.
By a 3-2 vote, against the wishes of chairman Jerome Horton, the board dropped Lowe’s taxable profit on the sale by $1.4 million in mortgage interest. The revised number on which he and wife Sheryl Berkoff will owe taxes is $12.2 million, about $6 million less than the Franchise Tax Board had originally calculated.
Lowe and Berkoff personally appeared before the Board of Equalization in August to testify on their appeal of the Franchise Tax Board assessment. They claimed that the Franchise Tax Board had failed to give them enough credit for costs of remodeling the home before it was sold for $25 million.
In December, the Board of Equalization settled on a taxable gain of $13.5 million, which was closer to Lowe’s number than to the Franchise Tax Board’s assessment. The case was especially complex because most of the records of remodeling expenses were missing.
Then, in January, the board rescinded its action because, it was said, its members had been confused by the welter of conflicting numbers, and rescheduled the matter for its meeting this week in Culver City.
Democratic board member Fiona Ma moved the $1.4 million reduction but Democrat Horton opposed it as a potential “gift of public funds.” Ultimately, Ma and Republicans Diane Harkey and George Runner backed Ma, while Yvette Stowers, Democratic Controller Betty Yee’s surrogate on the board, sided with Horton.