Business News Legal

Jackson estate sued for over $500 million in unpaid tax

By | Published on Tuesday 11 February 2014

Michael Jackson

US tax authorities have begun legal battle with Michael Jackson’s estate over the amount of inheritance tax that should have been paid following the singer’s demise.

According to the LA Times, in an ongoing dispute the IRS has now filed new court documents that show how executors of the estate estimated the singer’s net worth at the time of his death in 2009 at just over $7 million. However, the tax collectors say it was more like $1.125 billion. Which, it has to be said, is quite a difference. The IRS is now demanding $505 in unpaid taxes and a further $197 million in fines.

The massive discrepancy comes mainly from two figures in the estate’s original tax calculations. First, the value of Jackson’s likeness, which the estate put at $2105, and the IRS has calculated at over $434 million. Secondly, the singer’s interest in the trust that owns his share of the Sony/ATV publishing company – which in turn controls much of The Beatles catalogue. The estate reckoned that this was worth nothing at all, while the IRS puts it at around $469 million.

On the value of his likeness, the estate might argue that the Jackson brand had depreciated in value somewhat in the years before his death, though the speed with which his planned O2 residency in London sold out suggests he still commanded quite an audience. As for the value of his Sony/ATV shareholding, presumably the complicated nature of the trust in which the stake was held justified the zero dollar valuation, though it was widely reported many of Jackson’s pre-death debts were secured on his share of the publishing major.

Elsewhere, the IRS also claims that the estate had undervalued or failed to declare “items of personal property, including vehicles”.

Most cases of this type are settled out of court, though with such a large discrepancy between what each side feels is owed, this case may go all the way to trial. Well, what’s one more posthumous court battle between friends?



READ MORE ABOUT: