Jackson Estate in Scrap with IRS Over Intangible Asset Values
The King of Pop is dead, but he is far from out of the limelight. Attracting attention currently is a battle between the estate of Michael Jackson and the Internal Revenue Service over the value of intangible assets.
Attempting to assign a value to such ethereal things as intangibles is always difficult, but that doesn’t mean that the IRS is afraid of pressing such matters. That’s especially true if what’s at stake is an amount in excess of $702 million. That’s what the IRS says the Jackson estate owes to the U.S. Government.
Jackson died in 2009. At that time, the executors of the will pegged the singer’s net worth at just over $7 million. But the IRS says a figure of $1.12 billion is more appropriate.
One key point of controversy is the value each side claims should be assigned to Jackson’s image. The estate values his likeness at a mere $2,105. The IRS says it’s worth more like $434 million.
Another issue of contention is the value of the estate’s interest in a trust that holds the rights to a catalog of some songs of Jackson and the Beatles. The estate says it’s zero. The IRS says the value of the trust to the estate should be $469 million.
Adding to the tensions is an IRS claim that a tax return filed after Jackson death is so inaccurate that it may warrant a penalty double what is normally sought.
Now it appears the tax court will decide.
Most estates aren’t worth enough to warrant even filing a tax return. Experts say that those that do usually trigger an audit and tax court is usually avoided. Sometimes, though, as apparently has happened in this case, tax litigation may be deemed appropriate.
And what is equally clear is that it’s important when faced with a tax controversy to have an experienced attorney’s help.
Source:Los Angeles Times, “Michael Jackson estate embroiled in tax fight with IRS,” Jeff Gottlieb, Feb. 7, 2014