IRS: Michael Jackson Assets Undervalued
The Internal Revenue Service has filed documents in US Tax Court claiming that Michael Jackson’s estate has severely undervalued his image and music catalog, claiming that the estate owes an extra $505 million in taxes, plus $197 million in penalties. While the Jackson estate’s executors valued his net worth at a little over $7 million when he died in June 2009, the IRS claims it was closer to $1.125 billion, according to the Los Angeles Times.
The IRS assessed a gross valuation misstatement penalty of 40 percent on the estate. One of the items that the IRS is disputing is the value of Jackson’s likeness. While Jackson’s estate valued his likeness at only $2,105, the IRS estimated it to be a whopping $434.264 million.
In addition, the estate valued Jackson’s interest in the trust that owns songs from his own music catalog and that of The Beatles at zero, while the IRS estimated it to be worth $469 million. Apparently, Jackson borrowed $320 million by using his interest in the catalogue as collateral, which could explain the estate’s previously estimated value.
The estate also valued Jackson’s interest in a different trust at $2.2 million, while the IRS estimated it to be $60.6 million. Similarly,the estate valued Jackson’s interest in an investment entity known as MJJ Ventures at about $14 million; the IRS estimated it at $81.13 million.
Jackson’s estate also valued his rights to master recordings of the Jackson 5 at $11.193 million, while the IRS valued them at close to $45.5 million.
Source: Los Angeles Times at http://www.latimes.com/local/la-me-jackson-taxes-20140208,0,3089248.story?page=1#axzz2swD9CW2P