Though he passed away in 2009, the Michael Jackson estate has been in an extremely long and ongoing fight with the IRS over the valuation of the estate for tax purposes. Earlier in May, Tax Court Judge Mark Holmes ruled that the combined value of Jackson’s assets was around $111.5 million. For comparison, Jackson’s estate argued that the total value was $5.1 million, while the IRS argued for a total value of $481.9 million, in addition to millions in penalties.
One of the largest points that the estate and the IRS disagreed upon was Michael Jackson’s “name and likeness” which the estate valued at $4 million, yet the IRS, utilizing their outside tax expert, valued at $61 million. Weston Anson, chairman of an intellectual property consulting firm, was the IRS’s outside expert and only expert opinion, and his credibility was called into question by the judge’s opinion. The judge noted that during the trial, Anson stated that he had never worked with the IRS before, even though he had previously been retained by the IRS to write a valuation report for the Intangible Property Rights held by the estate of Whitney Houston. Anson then lied a second time when he testified that neither he nor his firm ever advertised to promote business.
Judge Holmes also found multiple issues with the values argued by the Michael Jackson estate, however the ruling was welcomed by the estate and Jackson’s children as a win compared to the whopping almost $500 million valuation assessed by the IRS.
Lessons can be learned from this ruling, regardless of estate size. Proper estate planning can be instrumental in making sure your assets end up where you intend them to go, and to keep the IRS from pestering your heirs.
Questions? Contact your Henry+Horne tax professional today!
Haley Braun, CPA