Abbott and Costello were among the most bankable stars of the 1940s — Top 10 box-office draws for much of the decade and No. 1 in 1942 — yet by the mid-1950s financial mismanagement and studio realities wiped out much of that prosperity. Both men were known as free spenders and serious gamblers, and when the IRS disallowed roughly $500,000 in tax exemptions the partners were hit with crushing back taxes. The bill forced desperate measures: sale of homes, liquidation of assets, and, crucially, the sale of rights to many of the films that had once paid them percentages of profits. Their long-term contract with Universal, lasting 14 years and producing 36 films between 1940 and 1956, ended acrimoniously in 1954 when studio executives refused to meet the team’s new money demands and dropped them.
The result was a double humiliation — no longer protected by a major studio’s promotional machine, and stripped of ownership of the very pictures that had made them famous. The loss of intellectual property rights — a now-familiar Hollywood horror story — deprived them of residual income and cultural control, exacerbating personal debts and hastening the professional split. In later years Abbott and Costello’s routines survived in reruns and museum exhibits, but for the men themselves the fiscal collapse was an irrevocable fall from the top of the Golden Age system.
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