Sheryl Berkoff and Rob Lowe

Hollywood actor and Montecito resident Rob Lowe won a protracted battle with the California Board of Equalization over how much he should be taxed for the proceeds of a Garden Lane home he bought for $2.8 million in 1997 and sold for $25 million in 2005. Lowe and his wife Sheryl Berkoff argued they spent far more transforming a one-story Montecito teardown into a deluxe two-story pinup for Architectural Digest than their own financial records could substantiate and than two of the five boardmembers believed.

“The gap between the rich and the poor just got wider,” blistered chairperson Jerome Horton in a press release castigating the board majority for making the couple a “gift” of $514,000 courtesy of California taxpayers. Lowe and Berkoff shot back, accusing Horton of making anti-Semitic remarks in a private ex parte meeting. They charged that Horton asked Berkoff, who is Jewish, if she “Jewed down” the contractors who built the home. Horton did not respond for comment by deadline, nor did Lowe’s tax attorney, who was present at the meeting. Lowe has vowed to notify the Anti-Defamation League. In other media accounts, Horton denied making such remarks.

The couple claim to have spent $13 million transforming the property but could not account for $4.2 million of that, citing a perfect storm of computer crashes, deaths, and other reasons for lack of documentation. Because such expenditures are deducted from the sales price in determining taxable revenues, the gap made a significant difference financially. Horton so opposed the vote he sent out his own press release stating so.

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