Last week I read Manning Marable's Malcolm X: A Life of Reinvention. Professor Marable takes on his subject's self-created (and other-created) public images (most notably, those presented in the Autobiography of Malcolm X, as told to Alex Haley). The biography engages in a nuanced analysis of Malcolm X's intellectual transformations and personal developments, with a solid grounding in facts that have been obscured over time or discovered only recently.
The book is not without some controversy (see here, e.g.), but it is a worthwhile read for anyone interested in political history or 20th century American history.
To my tax professor's eye, the book raised a minor issue of academic interest. In 1963, Malcolm X, Alex Haley and the Doubleday publishing company entered into a "Memorandum Agreement" concerning the preparation of the manuscript that would become the "as told to" Autobiography. As Marable describes it:
Upon signing the contract the two men [Haley and Malcolm] each received twenty-five hundred dollars. In a second document sent to Malcolm from Haley, the key terms of the contract were restated, calling for a book manuscript of 224 pages. Haley acknowledged Malcolm's request that his royalty share be granted directly to NOI [Nation of Islam] Mosque No. 2 in Chicago. A deadline of October 1963 was set for the completion of the book.
The book was still not finished at the time of Malcolm X's gradual break from the Nation of Islam (starting at the end of 1963 and into the beginning of 1964). Marable reports that by March, 1964, Malcolm X had informed Doubleday that he wanted future royalties to go to the Muslim Mosque, Inc., a new organization under Malcolm X's leadership, not the Nation of Islam.
Under the assignment of income doctrine, a taxpayer may not avoid income tax liability simply by assigning contract rights to another. So in the case of Malcolm X's agreement with Doubleday, had the royalties been paid to Muslim Mosque, Inc., Malcolm X would still "own" the income for tax purposes and he - not the Mosque - would owe taxes on the receipts. Brave blog readers may recall from their basic introductory tax class the decision in Lucas v. Earl, 281 U.S. 111, 115, 50 S. Ct. 241, 241, 74 L. Ed. 731 (1929), in which Justice Holmes famously said: "[N]o distinction can be taken according to the motives leading to the arrangement by which the fruits are attributed to a different tree from that on which they grew."
After Malcolm X's assassination in February, 1965, Doubleday cancelled the publication contract. Grove Press published the book instead. Presumably Grove Press contracted with Alex Haley and Betty Shabazz, Malcolm X's widow (they are listed in later editions as the copyright holders - I have not seen a first edition), and the royalties were paid to them, thus mooting the income tax issue. Mr. Haley owed income tax on his royalties. Mrs. Shabazz owed income tax on hers.
To be sure, this is a very minor issue with minimal relevance to the biography itself, but it is proof that "tax issues are everywhere," as I tell my students.
Image source: CMG Worldwide.
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