Would you buy the rights to the King of Pop’s image and likeness for $2,105? Unless you have been living under a rock for the past thirty years, you have to respond with a resounding, “Of course!” While the rights aren’t for sale, that is the amount executors handling Michael Jackson’s estate determined was the appropriate value for the right to determine when and how Jackson’s picture, signature dance moves, holograms or other images would be used.
But the IRS thinks Jackson might be worth a little bit more—like $434 million more.
To understand what is going on, it’s helpful to have a little background about the estate tax. Jackson died in 2009 when the estate tax exemption was $3.5 million with a tax rate of 45%. So even after Jackson was dead, the IRS still wasn’t finished with him. Except for the first $3.5 million, the Jackson estate owed the IRS 45% of everything “The Gloved One” owned.
Sometimes figuring out the value of what someone owns is simple, for example where a decedent owned a checking account. But sometimes, this can be very difficult. According to IRS rules, the value of something is what a willing buyer would pay a willing seller.
Easy enough, but the Jackson estate isn’t selling, and what’s worse, there was only one MJ. How do you determine the value of a pop legend?
The estate didn’t say how it arrived at the $2,105 figure, but just applying a little common sense tells you that the real value is probably much higher. We all know about the scandals and accusations against Applehead, which certainly affects the value, but still, does anyone really think the actual value is only $2,105?
So what’s next? The IRS has alleged the estate owes $702 million in back taxes and penalties, and the estate is fighting back with filings this week in tax court. It will likely be many months before the tax court judges make a final determination, but while I don’t like doing this, I’m going to have to side with the IRS on this one. When all is said and done, I think the IRS, and not Jackson’s executors, will be singing “Beat It” on the courthouse steps.
About Morris Hall:
At Morris Hall, we have focused our legal practice on estate planning for over 40 years. Along with estate planning, our attorneys help clients and their families with matters of probate, trust administration, wills, power of attorneys, business planning, succession planning, legacy planning, charitable gifting and other important legal aspects. We also have divisions in financial, real estate and accounting to help you incorporate all of your planning together, ensuring that everything works perfectly for your needs and situation. Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Cave Creek, Tucson, Prescott, Flagstaff and Arrowhead. Contact us today at 888.222.1328 to schedule an appointment!
This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.
This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.
- Spring Summit 2023: Celebrating 30 Years of Indispensability in the Windy City - June 1, 2023
- What Is a HIPAA Release? - May 26, 2023
- What Happens If a Beneficiary Dies During Probate? - May 25, 2023
Leave a Reply