For Nicolas Cage the internet seems to full of some good news and some bad news today. First the bad, TMZ has documents that show that Nicolas Cage's current total owed to the IRS is now a steep $6,257,005. But here's the good, he may have finally unloaded his Bel-Air Tudor home. The home which once belonged to singer Tom Jones and to Dean Martin was for sale for as high as $35 million back in 2006. A sealed bid auction was scheduled for September 24 with the minimum opening offer set at $9.95 million. The MLS now has the home as "looking for backup" which means an offer has been made, and hopefully will stick. Cage paid around $6.5 million for the home in 1998. Cage also recently sold his New York City apartment which had been listed at $9.75 million.



He still has four homes on the market in the U.S.:
His Las Vegas home is listed at $9.49 million.


His Rhode Island home sits at $12 million.


One of his New Orleans homes is listed for $3.45 million.


The other, the haunted LaLaurie mansion is still listed for $3.55 million.

This is not a church, but the owner tried to claim it was to avoid paying real estate taxes. The Chicago Tribune's Elite Street column brings in the story of a home in Lake Bluff, Illinois owned by a banker who tried to duck out of around $80,000 in property taxes because he said that parishioners had congregated in his home so that his disabled wife could worship without leaving the house. Neighbors debunked that claim, telling the Tribune they never saw services held at the mansion. Over the summer an independent state administrative law judge for the Illinois Department of Revenue reversed the ruling leaving the banker liable for the tax bill. Now the property has hit the market. The Armenian Church of Lake Bluff is now for sale for $12.5 million, a hefty rise over the $3 million paid for the property in 2004.

The five-acre property is listed through Michael Realty & Associates and has 265 feet of private beach with elevator lifts to the beach. Listing pics are tiny but they show an exercise room, a barbershop with a mural, indoor pool, home theater, and a 12-car heated garage. The property was renovated with a 15,000 square foot addition in 2005. The master suite has a private wet bar, walk-in his and her closets and outdoor balconies overlooking Lake Michigan and an indoor private balcony overlooking indoor pool. The first floor great room has vaulted ceilings with four rain sensored skylights, a full formal dining room with attached butler pantry, with warming drawers and dishwasher, along with fireplace and wet bar. There does not appear to be a chapel.

Add Connecticut to the list of states with major budget issues -- a club with a growing membership lately. Instead of just taxing the rich to help make ends meet, Governor M. Jodi Rell has decided to split hairs and tax the living rich while providing tax breaks to the rich who have passed on. Her budget plan includes a proposal to increase the personal income tax rate from 5% to 6.5% for those earning $500,000 or more per year and for joint filers earning $1 million or more. On the flip-side this plan would eliminate the inheritance tax which is rather appealing to those with ample funds to pass onto their heirs. This applies to estates worth $2 million or more. The Legislature will be bickering over the details -- what is your take on it?

Could the wealthiest people in the U.S. really giving be giving up their citizenship to save money on taxes? Wealth Bulletin has a report that says that some wealthy Americans who live abroad are so determined to shed the yoke of American taxation that they are willing to surrender their U.S. passports. The U.S. tax laws require those living outside the U.S. to continue to pay taxes on worldwide income no matter where they live.

Those who do choose to leave will be subject to something known as the exit tax. The exit tax affects both US citizens who expatriate and long-term US permanent residents who give up their green cards which they have held for eight of the last 15 years. Those who qualify for the exit tax have a net worth of over $2 million and an average net U.S. income tax liability of greater than $139,000 for the five year period prior to expatriation. Those who want to leave pay a one-time tax on gains over $600,000. Isla Offshore Advisor has more of the salient details including the fact that the tax is due 90 days after giving up your citizenship. Right now, when just about everyone's net worth is lower it is seeming like an opportune time for many to take the leap.

Wealth Bulletin quotes Jay Krause, a partner at private-client specialist law firm Withers who says he's seen a rise in those interested in expatriation lately. This number may increase in the wake of a crackdown on clients of UBS AG. The Wall Street Journal reports that lawyers representing UBS clients think that the bank will reveal names associated with 5,000 to 10,000 accounts.

Wealth Bulletin paints a dramatic picture in which the ultra-wealthy elude possible taxes by staying on their yachts and cruising outside coastal waters. Just how many of these yacht-borne rich renegades are there? It is estimated that there could be a few thousand of them keeping trillions of dollars away from global tax authorities. Those who decide to pay the U.S. exit tax would then become former U.S. citizens and would be able to travel to the U.S. without facing more taxes. Around 90 people gave up their citizenship in the first half of 2009 so lets not call this a mass exodus yet.

[Thanks, Ben!]

In Florida, yacht abandonment and repossessions are on the rise but wealthy boat owners may soon get a bit of tax relief. The Miami Herald reports that state legislators are considering a tax break on boats and planes. A bill currently moving through the Florida legislature called the Aviation and Maritime Full Employment Act would cap the sales tax on boats and planes at $25,000.

It is hoped that the bill would stimulate the economy by creating jobs. Currently many rich people avoid the sales tax by buying their expensive planes and yachts elsewhere and storing them in other states or registering them in the Cayman Islands and other places. These actions cost the state not just tax revenue but it makes it less likely that the owner will buy other related services in Florida. The Herald quotes Republican Representative Tom Grady who says: "Someone might want to beat up the rich. I don't. Anybody with capital to invest in the state of Florida, where jobs can be created, I want them here. I want their money here."

Others are saying the tax break is outrageous especially at a time when the state is contemplating raising the price of licenses and other fees that would affect a broader swath of the population. The cap could cost the the state $8.1 million annually and local government could lose $1.1 million. No number for the potential economic gain from the new bill has been forecast.

The City of Boston just can't seem to make up its mind. Back in December, officials were mulling an absolute smoking ban that likely would have led to the closure of several cigar-related businesses (such as Cigar Masters on Boylston St.). Now, the city sees tobacco as a way to bring some new cash into ol' Beantown's coffers – up to $13 million annually, actually. The tax increase would cover loose tobacco, small cigars and smokeless tobacco.

Having tapped the cigarette well dry with a recent tax increase from $1 a pack to $2.51 last July, the lawmakers have had to hunt elsewhere. Officials, with bizarre logic, believe that the cigarette tax has led price-sensitive teenagers to consume other forms of tobacco. Yet, there has been no report of an outbreak hoodlums smoking White Owls at Copley.

While this measure does not affect the luxury cigar market directly, the underlying thinking may signal future legislative ambition. Cigarettes, long the preferred tobacco product to tax, will eventually lose their value as a source of tax revenue, particularly if they are taxed out of existence. While the stated ambition of the proposed Massachusetts measure is to price tobacco out of the reach of minors, it also suggests that alternative sources of tobacco tax may be necessary.

We've seen this thinking in action with the SCHIP. The states may follow.

Worried about the future of your right to enjoy cigars? Join the Cigar Rights of America.

The SCHIP takes effect next week, and cigar smokers everywhere are dreading Wednesday. We've seen it coming, and I'm sure a few committed, deep-pocketed smokers have been stocking up to lock in discounts now. For the rest of us, though, there's no choice but to bite the bullet. And, in some places, that bullet is flying faster than in others.

Employees at the 16 Tocacco Depot stores, for example, have been rushing around to put new prices on various tobacco products, even though we still have nearly a week left. Fred Hoyland, who runs the show at that chain, says that some of the manufactures have raised their prices early – weeks in advance, even – in a play to beat the bargain hunters to the tax punch. Hoyland calls this "keep[ing] the market and inventory stable."

So, all your planning was probably for nothing. The house always wins ...

In 2007, the island of Sardinia put luxury taxes in place that affected second homes, private yachts and aircraft. There's a new governor on the Italian island and as part of his budget he is proposing doing away with the tax on mooring luxury yachts and landing private aircraft. Opponents said the taxes scared away the rich who came to stay on the island and hurt tourism.

One person delighting in the potential change is Italy's freespending Prime Minister Silvio Berlusconi. Berlusconi, who handpicked the new governor, Ugo Cappellacci to run against the previous governor Renato Soru, just happens to own a vacation home on Sardinia.

President Obama wants to create jobs, yet he isn't too worried about some that already exist. Miami's cigar manufacturers are watching April 1, 2009 with grave concern. The new State Children's Health Insurance Plan (SCHIP) takes effect on that date, resulting in a 900 percent tax increase on every cigar made in the United States – or imported here.

What's at stake?

For Miami, it's the many people responsible for rolling 75 percent of the 272 million cigars rolled in this country. Manufacturers and retailers alike are bracing themselves. A tax that takes the surcharge on hecho a mano sticks from 4 cents to 40.26 cents is cause for alarm.

So, as my sergeant used to say, "Smoke if you got 'em." At this rate, you may not have 'em much longer ... or at least not as many.

Let the madness begin! Following grumblings across the country, more municipalities are starting to jump on the sin tax bandwagon ... and they're targeting us. Maryland, for example, is looking to use tax increases on tobacco (as well as alcohol and payroll) to fund health insurance via the state.

In a bout of much-welcomed civil disobedience, Davidus Cigars in Frederick and Urbana, Maryland, offers a message to his customers on its website: "CAUTION, you are about to enter the government shakedown zone."

The Maryland bill would kick the tax on cigars from 15 percent of the manufacturer's price to 90 percent. Of course, these are not the percentages that consumers would see (as a result of retailer markups), but the impact would be noticeable. Meanwhile, the cigarette tax would increase by 37.5 percent to $2.75. The State of Maryland expects these measures to generate $28 million in tax revenue.

Retailers, of course, are bleak. Davidus owner David Castro believes that the 90 percent tax rate would put him out of business. Proponents of the new expense for cigar smokers are dreaming more optimistic, claiming that cigar industry folks are "Chicken Little crying wolf."

Across the border in Pennsylvania, Governor Ed Rendell's 2009 budget would add another 36 cents per ounce to the tax on loose tobacco and the same amount for every 10 cigars. The tax on cigarettes would move from $1.35 to $1.45.

My colleague, Jared, highlighted Forbes' Richest 400 this past September including billionaires Bill Gates, Warren Buffett and Michael Bloomberg. Now, Forbes has released interesting information about this elite group's tax responsibilities. It seems even though the top 400 make the most money they are not paying the highest percentage of taxes. The following numbers are based on the IRS' 2006 figures and the IRS' ranking of the top 400 (although there is a lot of overlap between the Forbes' 400 and the IRS' 400):

• The Top 400 only paid an average of 17% of federal income tax
• 17% is the lowest tax bite in the fifteen-year period of this group's IRS statistics
• In contrast, the top 5% pay an average of 21% of federal income tax and the top 1% pay an average of 23%!

You can read more of the financial details here but that synopsis just goes to show...its good to be at the top.

In a highly-anticipated overhaul, the IRS has successfully revised its rules for charities filing taxes. Form 990 will now require charities to disclose employee salaries greater than $150,000 and will also ask organizations to report "key employees" who control a 10% or greater portion of the charity's activities. The changes will arguably make many charities more transparent and therefore easier to research on behalf of potential donors.

Guidestar.org, the non-profit data kings, will use this new information to provide more comprehensive analysis of the non-profits in its database, all in the attempt to encourage charitable giving by providing individual donors (and their estate planners) with the facts they need.

Music producer Swiss Beatz was recently the subject of a Forbes profile on the business of hip-hop but big money can also come with big tax bills. TMZ is reporting that Swiss Beatz, a.k.a. Kasseem Mike Dean and his estranged wife, singer Mashonda owe $842,644.52 in taxes and a tax lien has been filed. This news comes just after he was named seventh on a list of the biggest earning hip-hop stars for 2008 that estimated his annual earnings at $17 million. He has been working with Tommy Hilfiger on his new music projects as well as producing hits for hip-hop stars including Jay-Z, 50 Cent, Beyoncé and DMX and releasing his first solo rap album, One Man Band Man last year.

[Thanks, Eezzy!]

Summer vacation season is still a month off but the NY Sun deliver some bad news for the wealthy who are planning to travel by private plane or yacht. A number of states are looking to tax private planes and yachts that come to their states and stay for a short time. Currently New York does not tax nonresidents who bring aircraft or boats into the state but Maine charges pilots who have their plane in the state more than 20 days a "use tax." A use tax is a form of excise tax levied on personal property. The NY Sun article reports that a Massachusetts pilot got a bill for more than $25,000 for keeping his plane in the state in 2003.

The Maine state government website has addressed the use tax controversy clarifying their policies by saying that "in most situations, nonresidents flying into Maine do not owe the tax and are not at risk of being assessed." They also stress that the Maine use tax is not a possibility unless an aircraft comes into Maine within the first 12 months after its purchase by a nonresident and that if the aircraft is present in Maine within the first 12 months for purposes other than repair and maintenance, no Maine use tax is due if a sales or use tax of 5% or more was paid in another state. In the case of the pilot in the NY Sun article he had not paid sales tax when he bought the plane in Massachusetts because Massachusetts does not charge sales tax on planes. Pilots are also wary of traveling in Florida, Illinois, and Washington which have all toughened enforcement of sales and use taxes on aircraft. Each state has its own policies on use tax so it's a good idea to check the state website if you are planning to keep your yacht or plane in a state other than your home state for longer than a couple of weeks especially if your plane or boat is a new purchase and you did not pay sales tax.

And there was more bad news from the Senate recently. The U.S. Senate voted in favor of legislation to raise taxes on gasoline for private jets. The tax hike will help pay for updating the FAA air traffic control system. The bill will have private jet owners paying 36 cents per gallon in tax up from 21.8 cents.

It's the season for worrying every last deduction you can possibly take on your taxes. As you are sweating those last minute details here's a story to make your blood boil. The San Francisco Chronicle reports that Oracle CEO Larry Ellison will get a $3 mllion tax break because his Japanese-style home in Woodside, California is "functionally obsolete."

Ellison's Octopus Holdings LP bought the 23-acre site in May 1995 for $12 million and then sent to work on a nine year project constructing his version of Xanadu, a lavish 8,000-square-foot home based on a Japanese emperor's 16th century estate. Ellison seems to have a taste for all things Japanese, he also bought a home in Atherton in 1987 and turned it into a Japanese-style palace with seven bedrooms, a traditional tea house, bath house, gardens, a koi pond and waterfalls on 2.8 acres. That home was quietly put on the market in 2005 for $25 million. The property website for that home is here.

According to the Chronicle, the assessor's office based its January 2005 valuation of Elllison's Woodside home on reproduction costs, the $166.3 million it should have cost to build the home. The construction actually cost more than $200 million. But attorney William Bennett representing Octopus Holdings argued that the property was worth only $64.7 million at that time and in the two tax years, since entitling Ellison to a $3 million rebate on taxes paid. The appeals board agreed and so the $3 million will come from San Mateo county's property taxes paid this year. Of that $3 million it is estimated that nearly $1.4 million would have gone to schools in the area .

Ellison's home decline in value is shocking in an area that boasts very expensive real estate thanks to the Googleaires, people who made their fortune at Google and invested in big homes locally. The reason for the dip in value is essentially that Ellison created a home that no one else would want to buy. The home is said to suffer from "significant functional obsolescence" because the Japanese architecture, elaborate landscaping and over improvements to the property have made it a home that is costly to maintain and has reduced value to to others.

Ellison, who has a net worth of $25 billion according to Forbes, has turned his attentions to Southern California in recent years. In 2005 he picked up five lots in Malibu's pricey Carbon Beach area for a reported $65 million and is said to be looking into buying an NFL franchise for Los Angeles.

As the Chornicle article points out, perhaps the only good news out of this may come from the fact that it draws attention to the fact that homeowners can have their property values reassessed. With the declining real estate market in many regions some people may be in a situation where their property is being over-assessed but they are not aware of it.

[Thanks to Uncle Roger and Lana for calling our attention to this one]