In addition, the 3.8% tax that applies to most capital gains and other passive income of higher earners likely doesn’t apply here because the songwriters are active participants in the business, according to Mr. The advantage exists because in 2006, senators and congressmen heeded the call of the country-music industry and created a special provision for songwriters. The lower capital-gains rate isn’t available to painters, filmmakers or videogame developers, who pay ordinary income-tax rates on sales as well as royalties. That’s instead of owing ordinary tax rates of up to 37% each year on the royalty income they get from streaming, licensing and other uses of their works.

Concert revenue has dropped sharply during the pandemic and prices for music rights are rising, now at 10 to 20 times the annual royalties.įor musicians, a key advantage is that they can sell self-created works and owe capital-gains tax rates of 20% on the sale. There are, for sure, important nontax reasons for artists to cash in when they may have been reluctant before. “Many of these deals are not tax-driven, but some have a significant tax flavor,” says Alan Epstein, who chairs the entertainment and media group at law firm Venable LLP’s Los Angeles office. Dylan’s sale is the latest and largest of a spate of similar deals this year that come with significant tax benefits both for the songwriters selling the rights and for the companies buying them, and those incentives are encouraging transactions. The price hasn’t been revealed but is said to be between $300 million and $400 million. The sale of Bob Dylan’s songwriting catalog to Universal Music Publishing Group, announced this week, likely means he is trading an ongoing income stream for a lump sum now. The answer, my friend, is blowin’ in the tax code.

Bob dylan songbook sale