Can Michael Jackson's Estate "Beat It" With IRS

08/26/2013

It was recently reported that Michael Jackson's estate is suing the IRS over the IRS' valuation of the assets in Jackson's estate for federal estate tax purposes.  Based on the IRS valuation, it has been repoted that the estate is being hit with an estate tax bill of over $500 million and underpayment and late penalties approaching $200 million.  So the qusestion is, will Michael Jackson's estate be able to "Beat It."

There is apparently a big disagreement over what the true value is for Michael Jackson's estate.  It has been reported that the estate has valued the assets at about $7 million compared to a value of about $1.5 billion that the IRS is asserting.

Why such a big difference?  The estate valued Jackson's "image and likeness" at $2,105; the IRS's value is $434 million for his "image and likeness."  For reasons that are not clear, the estate did not include the value of Jackson's 50% interest in the Sony/ATV music catalogue on the estate tax return; the IRS valued the interest at $469 million.

Other assets that appear to be in contention are the estate's interest in Neverland Ranch and Jackson's vast art collection. The IRS has not commented on the suit.  Jackson's did comment saying that the IRS's appraisal values "were based on speculative and erroneous assumptions unsupported by the facts or law."

Stay tuned for how this case turns out.