No Laughing Matter

Amos 'n' Andy started it last September when they left NBC and sold their show to CBS for $2,000,000. The Bureau of Internal Revenue examined this complicated deal and agreed that the $2,000,000 was subject to a capital-gains tax (25%) instead of personal income tax (up to 77%).

CBS, dangling the juicy bait of tax savings before other NBC stars, soon made off with Jack Benny. Bing Crosby, Edgar Bergen, Phil Harris, Fibber McGee & Molly, and Red Skelton were reported planning to join the exodus to CBS. This week the tax collector cut the gossip short. He had bad news for radio stars who would like to revise contracts.

For CBS and Amusement Enterprises, Inc. (Comedian Benny's corporate entity), the Bureau of Internal Revenue ruling meant that the $1,356,000 due Benny from CBS as 60% stockholder was subject to a whopping $1,030,000 in personal income taxes. Until he got the dire word, professional skinflint Benny had hoped (on advice of counsel) that he would have to pay only $300,000 in capital-gains taxes.

The rude blow from Washington filled the air with lamentations, explanations and evasions. An Internal Revenue Bureau spokesman unofficially explained the apparent reversal of the earlier ruling by pointing out that the Amos 'n' Andy transaction was a transfer of real property, since the show presumably could go on forever, even after the death of its originators (Charles Correll & Freeman Gosden). But the Jack Benny Show, without Benny, would undoubtedly collapse; therefore, Benny's personal services, rather than his real property, are involved.

The new friendship between Benny and CBS also seemed to be suffering a strain. CBS Vice President Frank Stanton declared that it was "utterly fantastic" for anyone to expect CBS to make up Benny's tax losses because of the bureau's ruling. Said Stanton, washing his hands of the whole affair: "From here on out it is strictly a matter between Mr. Benny and the Revenue Bureau."

NBC said nothing, but it plainly showed that it was enjoying its role of the amused, I-told-you-so onlooker.

This file is automatically generated by a robot program, so reader's discretion is required.