Michael Jackson is the undisputed King of Pop! His ability to entertain and mesmerize crowds across the world is second to none. But the IRS is not as impressed with Michael Jackson’s estate. The IRS is essentially saying Beat It to what the estate claims it is worth.
When Michael Jackson died on June 25, 2009, one of the first things the estate needed to do is determine what it was worth. All of Jackson’s assets needed a value placed on them. There are three main reasons why a valuation needs to be done. First, the valuation is used to determine if and how much estate taxes are due. Second, the valuation is used to establish a new cost basis for capital gains tax calculations. And third, the valuation is used to be able to split and distribute the estate to beneficiaries. Cutting corners in determining an estate’s value can be Dangerous.
Thinking it was a Smooth Criminal, the estate valued all of the assets at $7 million. This made the King of Pop’s estate tax bill around $900,000. It is Human Nature to try to minimize what the government gets from each of us, but it really seems the estate is dealing in some Monkey Business.
The estate can Say Say Say what it wants as to the valuation, but then, like is the case now, the IRS can tell the estate, “Don’t be Messin’ ‘Round” with the numbers and bring the estate to tax court to sort it all out.
The IRS has told the estate that it is Bad. The values the estate placed on items like Jackson’s image and library of Beatles songs are so far Off the Wall. The IRS would value Jackson’s estate at over $1.1 billion (that is Billion with a “B”).
The tax and penalties the IRS says the estate owes is over $505 million!
The court case will be a Thriller. It will be interesting to hear how it turns out. Having a large net worth is the Price of Fame. And in this case, the estate will not be Invincible, and will be paying a vast sum of Money. It may not be Black and White, but common sense would tell us Jackson had more than $7 million.
Though we all may not have Michael Jackson’s problems, we can all take the lesson of handling a loved one’s estate properly. No one wants to be Eaten Alive by the IRS.
It all starts with having a properly planned estate. And then having it properly administered when there is a death. Our attorneys are here to help you with all of your planning and administration needs.
Contributed by MH Albuquerque and Santa Fe Estate Planning Attorney James P. Plitz.
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