And the battle over Michael Jackson’s estate continues. The singer died in 2009 yet drama and scandal is still linked to his name. According to court documents, the IRS claims Michael Jackson’s estate owes $702 million in taxes.
Back in 2009, executors of the MJ estate claimed his net worth was around $7 million. This probably sounds ridiculous to even me and you. Despite his over-the-top lifestyle, The King of Pop had to be worth more than that. Even Kim Kardashian’s bank account is bigger. So the IRS did some digging and they estimated Michael’s net worth to actually be $1.125 billion. Quite a big difference.
Because the executors lied so much, the IRS feels it qualifies for a gross valuation penalty. This penalty doubles the usual 20% penalty for underpayment. The estate now owes $505 million in taxes plus an additional $197 million in penalties.
“I’ve never even heard of the gross valuation misstatement penalty being asserted,” said Andrew Katzenstein, an estate tax expert at the law firm Proskauer Rose in Los Angeles.
Most of the discrepancy is based on the use of Michael Jackson’s likeness. Celebrities are able to add to their wealth through the use of their likeness even after death. The estate initially valued MJ’s likeness at $2,105. However the IRS says its valued at $434 million.
Michael Jackson also famously bought the rights The Beatles’ song catalogue. The estate valued Michael’s interest in a trust that owns songs by The Beatles as well as his own recordings at $0. The IRS says it should be valued at $469 million.
The estate also undervalued several other trusts and personal property back in 2009. Even the value of the Jackson 5 master recordings come into question. The IRS values it at $45.5 million instead of $11.2 million the estate claimed.
Forbes magazine even listed Michael Jackson as the highest paid celebrity, dead or alive, in 2013. He earned $160 million. The estate has earned $475 million since his death. If the estate is forced to pay the owed taxes, it can do so by selling assets or pay over a period of 15 years
Shoving out all this money would cut Michael’s fortune nearly in half. Again, a cool $500 mil would be just fine for you and me. But this would be a huge blow to Michael’s three children, not to mention Jermaine, Marlon, Tito, La Toya, Randi, Rebbie… Boo Hoo.
What are your thoughts on the executors of MJ’s estate lying to the IRS and owing $702 million? Join the conversation and leave a comment.
Image Credit: FameFlynet
