The heirs of Jacky Kirby -- an artist behind figures such as Captain America, the Fantastic Four and X-Men -- are entangled in a legal dispute with Marvel Comics, as the New York Times reports here. Mr. Kirby's heirs have sought to terminate copyright licenses allegedly granted by Mr. Kirby during his lifetime to Marvel Comics. Marvel Comics counters that Mr. Kirby produced "works for hire," and that the heirs thus have no rights in the intellectual property behind these massively successful comic characters.
It does not appear that Marvel paid Mr. Kirby any royalties during his lifetime. (See here.) But if the court finds that the heirs indeed have the ability to terminate prior copyright licenses, Marvel will need to pony up some serious cash in order to continue using Mr. Kirby's intellectual property. The heirs might need to turn around and pay a portion of that money to the federal government. If the Kirby heirs do, in fact, possess termination rights with respect to Mr. Kirby's intellectual property, then the value of those termination rights should have been included in Mr. Kirby's gross estate for estate tax purposes. Even though Mr. Kirby died in 1994, there is no reason to think that the IRS would be prohibited (by a statute of limitations or otherwise) from attempting to collect. The tax bill could be in the tens of millions.
For the tax heads among us, Mitchell Gans and I break down the tax analysis here.