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IRS accuses Michael Jackson estate of tax dodging, wants $700M

By Brett Wilkins     Feb 8, 2014 in Entertainment
The Internal Revenue Service claims the Michael Jackson estate has cheated the government out of more than half a billion dollars in unpaid taxes, and is seeking more than $700 million in back taxes and penalties.
The Los Angeles Times reports the late King of Pop's estate is embroiled in a fight with the feds over its value at the time of Jackson's death and how much tax it owes.
According to documents filed in US Tax Court in Washington, DC, Jackson's net worth at the time of his June 2009 death was slightly more than $7 million.
But the IRS says Jackson was worth a staggering $1.125 billion. The agency claims the estate's return was so inaccurate that it warrants the assessment of a gross valuation misstatement penalty, allowing the government to double its customary 20 percent underpayment penalty.
"I've never heard of the gross valuation misstatement penalty being asserted," estate tax expert Andrew Katzenstein told the Times.
Among the reported discrepancies between the Jackson estate's figures and those claimed by the IRS:
-Michael Jackson's likeness was valued at $2,105 by his estate. The IRS values it at $434 million.
-Jackson's interest in a trust that owns songs by Jackson and the Beatles is worth nothing, according to the estate. The IRS says it's worth $469 million.
-A separate Michael Jackson trust is worth $2.2 million, according to the estate. The IRS values it at $60.6 million.
-The estate values Jackson 5 master recordings at $11.2 million. They're really worth $45.5 million, according to the IRS.
All told, the IRS claims Jackson's estate owes $505 million in taxes and another $197 million in penalties, for a total bill of more than $702 million.
Katzenstein questioned whether Jackson's likeness was worth as much as the government claims.
"This is something unusual," the tax expert told the Times. "He was one of the premier entertainers of our time. So there are really no comparables, and it leaves the valuation question open to a huge range of possibilities."
"Do I think his likeness was worth $2,105? No. But was it worth $400 million?"
Jackson's estate has been making massive profits since the singer's death. According to a July 2012 court filing, it earned $475 million. Last October, Forbes named Jackson the highest-paid celebrity, living or dead, of 2013, with $160 million in earnings.
Neither the IRS or Jackson estate attorney Howard Weitzman would comment on the matter.
More about Internal revenue service, Michael jackson, michael jackson estate, michael jackson tax, michael jackson irs
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