A dispute one year in the making has found its way to federal court. Representatives for the estate of deceased pop legend Michael Jackson have filed challenges to the IRS’ levies on the value of Jackson’s likeness and image. The penalties associated with the IRS’ request also apply to properties formerly owned by him, including the LLC that owns Neverland Ranch.
The dispute centers on the amount of estate taxes actually paid after Jackson passed away on June 25, 2009. Essentially, the IRS believes that the value of Jackson’s assets was much more than what was reported.
While actual amount of taxes (and penalties) are unknown, the IRS has the burden of showing that the value of Jackson’s estate is such that additional amounts must be paid. Meanwhile, representatives for the estate maintain that the estate tax return properly reflects the value of Jackson’s properties, and that no further taxes or payments are necessary.
Properties such as a celebrity’s image and likeness are notoriously difficult to determine for tax purposes, because of the differing beliefs over how popular he or she is after death. Some believe that Jackson’s image is forever tarnished because of accusations of sexual exploitation of children. Others believe that people will only remember him as the “King of Pop” and will point to how album sales and memorabilia spiked after his death.
Nevertheless, the dispute is a poignant reminder of the value of properly establishing an estate plan so that it is not consumed by estate taxes.
Source: Yahoo.com, Michael Jackson estate fights IRS in tax court, August 20, 2013