A Malibu Couple Paid $110M For Their Home. They Told the IRS It was Worth $36M.

A Canadian billionaire set records when he bought a landmark property on Carbon Beach. Months later, he claimed it had lost most of its value.

August 13, 2026

When he sold his Malibu home in 2018, Hard Rock Café founder Peter Morton set a record. At $110 million, it was the most expensive home sale in the county's history.

Less than two years later, the Canadian gas billionaire who bought it would come under the scrutiny of the IRS. On his taxes, the man had claimed the Carbon Beach home, with a movie theatre and 131 feet of beach frontage, was worth $36 million.

In the years since, Michael and Iris Smith have been embroiled in a legal fight with the federal agency to maintain that appraisal, and its corresponding tax bill.

On the stand, their appraiser testified there was “nothing special” or “out of the ordinary” about their property.

The county disagreed. Designed by Richard Meier, the architect behind The Getty, the two-parcel compound features a four-bedroom main residence, a three-bedroom guest house with a movie screening room, a large lap pool and 131 feet of beach frontage, all wrapped in plantation-grown teak that must be oiled multiple times a year to maintain its sheen.

To make its case, the county pointed to two comparable sales, including David Geffen’s Carbon Beach compound, which sold for $85 million in 2017. The county’s assessment appeals board ultimately valued the property at $103 million in 2022, finding no buyer of a $110 million home would consider a $36 million property an adequate substitute.

The owners sued the county the following year seeking a tax refund, but a trial court sided with the county in 2024.

On Monday, the Court of Appeal affirmed that ruling, agreeing with the county’s $103 million valuation, and denying the couple a refund.