Michael Jackson’s Estate and the IRS…”Bad” Time “Coming Together”
Michael Jackson’s estate Executors and the IRS are having a “Bad” time “Coming Together” over the valuation of Michael Jackson’s estate. The differing opinions of value has created a gap of over $700 million, including additional taxes, penalties and interest, and this on top of $100 million already paid with the filed federal estate tax return.The IRS issued a Notice of Deficiency in May of this year claiming the estate was significantly undervalued and demanding $505 million in additional estate taxes, and over $195 million in penalties and interest. The Executors of the estate disagreed with the Notice of Deficiency and on July 26 filed a petition in U.S. Tax court.
The estate is directly challenging the IRS’s overvaluation of real estate, automobiles, business ventures, personal property, recording assets, intellectual property, and the late Michael Jackson’s “image and likeness”. According to reports, the filed federal estate tax return reported a taxable estate of approximately $7 – $9 million, even though many estimates had valued his estate at approximately $400 million. The IRS, however, contends that the taxable value should be closer to $1.25 billion.
The estate taxes were calculated on the value of assets at the time of death, which was June 25, 2009. Although Jackson had hundreds of millions of dollars in assets at his death, he also carried nearly $500 million in debt. Even though the estate’s reported taxable value appears low, the IRS’s valuation seems incredibly high. The final decision lies with the U.S. Tax Court, after lots of filings, depositions, testimonies, and various appraisals, unless the case is settled as the process unfolds. For those drawn to the case, “Whatever Happens”, it will definitely be a “Thriller”.