Tuesday, September 17, 2013
As I have previously discussed, the Jackson Estate is arguing that the IRS has overvalued Michael Jackson's assets. The estate's petition did not include any dollar amounts. Tax lawyers are claiming that the lack of dollar amounts could mean large differences in the estate taxes paid and what is allegedly owed. The dispute turns on some assets that are difficult to calculate value for tax purposes such as Michael Jackson's "image and likeness." The penalties for under valuation is as high as 40 percent.
Documents released in litigation revealed the heart of the dispute was Michael Jackson's "image and likeness". The estate is valuing his image at $2,105 while the IRS's valuation was over $430 million. As a result, the IRS claims that the Jackson estate owes more than $700 million in tax penalties. This case has made Attorney's think about estate value and the inclusion of the image and likeness factor. Attorney Matt Kadish from Kadish, Hinkel & Weibel in Cleveland stated he "“unaware of any cases to date that have addressed whether the value of a person’s image rights are subject to estate tax, and if so, how to value them.” This may raise major concerns for estate planners that had not included image and likeness as part of a taxable estate because the IRS without precedent has decided to include it.
See Alexander Ripps, Protests Surge as IRS Sets Jackson Image at $430 Million: Taxes, Bloomberg, Sept. 10, 2013.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.