Next in my movie review series is one of my favorite movies, Trading Places, and not just because it was filmed in Philadelphia. While the plot is quite contrived, the acting is really funny – it’s Eddie Murphy back when he remembered what being a comedian meant. And Jamie Lee Curtis? This was just the beginning of a great comedic career for her (I loved her in True Lies).

[Here’s my disclaimer: As always, I’ll try my best not to give out any big spoiler type info – but I can’t promise. So, you’ve been warned!]

The Background

The movie focuses initially on two brothers, Mortimer and Randolph Duke, played wonderfully by Don Ameche and Ralph Bellamy, who are both rich and bored – not a great combination. As a social experiment, they make a bet and plot to improve the life of a poor man, Billy Ray Valentine (played by Eddie Murphy) at the expense of a successful man, Louis Winthorpe III (played by Dan Ackroyd). Mortimer believes that no matter what challenges are thrown at the men, they will remain true to their social standings. Randolph believes that each will adapt.

The Switch

The brothers choose Louis because he is an employee at their firm and has a respectable background – the perfect subject. His position at the firm makes it easy to ruin him: the brothers make it look as though he has stolen from the company and then plant drugs on him. The brothers proceed to freeze Louis’ bank accounts and lock him out of his home. Penniless and accused of a crime, Louis has nowhere to go – until a jailed hooker, Ophelia, (played by Jamie Lee Curtis) takes pity on him and takes him home.

At the same time, Billy Ray Valentine is picked up from jail by Mortimer and Randolph. They tell Billy Ray that he will be part of their program to assist the underprivileged. In reality, they plop him in the middle of Louis’ old life.

As before, my tax radar is on the second I hear anyone discussing gambling and prostitution (yeah, see if you read that on TaxProf blog). All earned income must be reported, even if illegally gained. That means that Billy Ray should have been reporting his hustlings and Ophelia should have been reporting her, um, hustlings. It also means that Mortimer and Randolph would also have to report their winnings, if any, from their bet (it’s important to note that they don’t tell us the amount of the bet in the beginning – it’s just “the usual amount”).

The Transition

Once a hustler, always a hustler. It doesn’t take Billy Ray long to figure out that the market is much like gambling – and he begins to shine at the firm.

Billy Ray learns to make money because he understands the commodities market – buy low, sell high. Capital gains, for these purposes, would likely be short term and would be calculated based on the selling price less the buying price. However, the firm deals largely with futures. I won’t even attempt to explain the taxation of futures (anyone?).

But when it comes to income, assuming that Billy Ray is being paid a salary, which is taxable, he would also have to consider the source of his other trappings. And this is where my analysis gets a little bit hazy. Billy Ray begins to live in Louis’ house. It’s clearly not a gift from Louis – but I’m not sure what it else it would be since that part isn’t really explained in the film. If the home was somehow part of the compensation package of being at the firm, then the fair market value of the perks would be reportable as income. It can’t be a gift from the brothers while he’s an employee; remember that usually, employers can’t make significant non-taxable gifts to employees.

At the opposite end of the spectrum, Louis grows more desperate despite his association with Ophelia, the stereotypical hooker with a heart of gold. While Ophelia is making some, um, income, on her own, it appears that Louis is stealing and begging. Louis would still be responsible for reporting the income from his activities.

At the pawnshop, however, Louis takes a loss on the sale of his fancy watch. While sales of personal property are generally excepted from capital gains, items that are considered artwork, collectible, or appreciated property may be includable. I’m not sure where a watch would fall in this argument but it’s worth noting that selling a watch valued at nearly $7000 in 1983 isn’t quite the same as selling your old jeans at a yard sale.

The Climax

Christmas serves as the backdrop for the pivotal scene in the movie. At the firm Christmas party, a boozed-up Louis shows up with a gun. Mortimer realizes that he has lost the bet (which turned out to be $1 – still reportable!) and confesses his loss to Randolph. However, Billy Ray overhears the brothers, is offended by their scheme, and decides to turn the tables.

The Turnabout

Billy Ray plots with Louis to teach the brothers a lesson. I won’t spill the entire scene, but suffice it to say that Billy Ray and Louis end up doing okay – and the brothers? Well, they won’t be drinking any freshly squeezed orange juice for a while.

While I don’t want to give away any more, remember that income from all sources is taxable – and losses, even giant ones, can be carried forward. But at the brothers’ ages, that kind of carry forward probably doesn’t mean a whole lot.

The Skinny

The movie was nominated for review by Madgirl. Remember that your comments will count as votes for Madgirl – and she can win some great prizes. So tell me what you think about the movie, the review, the locale…

And if you want in on the action, be sure and leave your suggestions on the original post – or send me an email.

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Kelly Phillips Erb is a tax attorney, tax writer, and podcaster.


  1. Choice, choice film! You should review Johnny Dangerously next time—and include that in your “tax evasion” post! Nice coming across your blog! I’m a standup comedienne in NYC and I love to see other female bloggers doin’ their thang!

  2. Also one of my all-time favorites. An excellent well-written, well-cast and well-acted “get even” buddy comedy before the genre went into the toilet.

    Perhaps Dan Ackroyd and Eddie Murphy’s best roles and best performances. And it had (I believe) Jamie Lee Curtis topless!

    I cannot find fault with any of your tax observations.

    A bit of movie trivia – in what subsequent Eddie Murphy film did Mortimer and Randolph Drake make a brief cameo?


  3. I know, I know! Coming to America! Another Eddie Murphy genius comedy (who could forget the band Sexual Chocolate)!

    And yes, Jamie Lee Curtis topless – briefly – kind of risque for the early 80s.

  4. I love Trading Places, I’ve lost count of how many times I’ve seen it. It’s one of those films which gets repeated on TV all the time in the UK, and I carry on watching whenever it is.

    Pus, Jamie Lee Curtis’ breasts are awesome!

  5. I never get tired of watching Trading Places–the opening montage of Philly scenes is fascinating. And it’s one of the most quotable movies ever!

  6. Is it wrong that every time I see M. Night’s name written out, I mentally add “a-ding-dong” – but he is a movie genius.

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