Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Tuesday, June 8, 2021

Tax Trial of the Century…

MJWhen one things of words associated with Michael Jackson (moonwalk, singer, dancer, performer, etc.) they do not typically thing of the words "tax court." However, due to a monstrous tax trial, those words are now associated with Michael Jackson. 

Following Michael Jackson's death in 2009, the Executors of his estate filed an estate tax return reporting the value of his property. Included in this valuation was "Jackson's image and likeness, his 50% interest in Sony/ATV, a music catalog and music publishing business, and his interest in Mijac Music, which owned musical compositions from a variety of artists, including Jackson." 

The IRS challenged the valuation of the assets and the Tax Court was left to determine the fair market value at Jackson's date of death. The Estate valuation was a reported $2.2 million and the IRS's valuation of the assets was a whopping $964 million. 

Due to the unique nature of the assets, the market values were difficult to assess. This difficulty lead to the necessity for professional appraisers to value the assets. 

The Court engaged in a thorough analysis of the valuations performed by experts retained by both sides, while also performing its own analysis. The Court ultimately came to a conclusion which can be seen at the link posted below. 

According to Jackson's Executors:

"This thoughtful ruling by the U.S. Tax Court is a huge, unambiguous victory for Michael Jackson's children. For nearly 12 years Michael's Estate has maintained that the government's valuation of Michael's assets on the day he passed away was outrageous and unfair, one that would have saddled his heirs with an oppressive tax liability of more than $700 million. . ." 

See Mark Dana, Tax Trial of the Century…, SGR Blog, (last visited June 8, 2021). 

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.

https://lawprofessors.typepad.com/trusts_estates_prof/2021/06/tax-trial-of-the-century.html

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