The executor of Michael Jackson’s estate and the IRS have rather divergent opinions of the value of his estate at the time of his death. Recent filings with the Tax Court reveal that the executor declared a value of $7 million. The IRS tells the Tax Court that the value is about $1.125 billion. This Tax Court case promises to be a Thriller.
We learned in August of 2013 that the estate was going to Tax Court with the IRS’ calculation of the estate tax and try to Beat It; we learned the particulars only a few days ago. A couple of the biggest differences of opinion are eye-popping. The estate valued the value of Jackson’s likeness at $2,105; the IRS says it was worth $434 million. (Heck, my likeness may be worth $2,105!) The estate valued the value of a music catalog comprised of works of Michael Jackson and of the Beatles (!) at zero; the IRS valued the catalog at $469 million.
The IRS says that the valuations by the estate were really Bad, so they have assessed the penalty for gross understatement. The total of taxes and penalty that the IRS wants is $702 million.
Valuation cases are never Black or White. This one will be very interesting to follow. If you are interested in the results of this conflict, You Are Not Alone.