Monday, January 6, 2014
As I have previously discussed, the IRS claims the estate of Michael Jackson owes $505.1 million in estate taxes as well as $196.9 million in penalties.
The core of this tax dispute is the valuation of the King of Pop’s image and likeness. The IRS says it’s $434 million while the estate claims it’s a mere $2,105. These drastically different figures were determined by different appraisers, and the true value of Jackson’s image and likeness probably lies somewhere in the middle. However, the estate may have the advantage in this case due to the unforeseen rise in Jackson’s fortunes following his death. For federal estate tax purposes, future payments made to the estate are valued by the projected future worth discounted to present value. Jackson’s debt at the time of his death as well as the controversies surrounding his sexual abuse charges, physical appearance, and public gaffes may allow for his estate to compromise much less than the IRS.
See Robert Wood, Trust Me, Michael Jackson Is Still Paying Taxes, Wealth Management, Dec. 30, 2013.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.