Michael Jackson Estate Owes $702 Million in Estate Taxes & Penalties
The executor of Michael Jackson’s estate says the king of pop’s estate was worth only $7 million. The IRS disagrees, valuing the estate at $1.125 billion. According to the Los Angeles Times, the IRS has told the estate it needs to pay $505 million in estate taxes and $197 million in penalties for underreporting the value of the estate.
The dispute hinges on the question of how to value intangible assets. In this case, the value of Michael Jackson’s image. How valuable is a star’s image in the future when it is licensed for t-shirts, television commercials and other uses? Jackson’s estate values it at $2,105. The IRS says it is worth $434 million.
The other major dispute is over the value of the Beatle’s catalog of songs that was owned by Jackson. His estate says the value of the catalog that includes songs, “Yesterday” and “Sgt. Pepper’s Lonely Hearts Club Band”, is nothing. The IRS puts the value at $469 million.
Small business owners and others with intangible assets should take note. If the IRS believes that the value of your estate is larger than your executor believes, your estate could end up insolvent.
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