Latest on MJJC

Michael Jackson’s Estate Challenges IRS in Tax Dispute

virginia_woolf

Proud Member
Joined
Nov 13, 2007
Messages
1,153
Points
48
http://www.bloomberg.com/news/2013-08-20/michael-jackson-s-estate-challenges-irs-in-tax-dispute.html

Michael Jackson’s Estate Challenges IRS in Tax Dispute
 By Andrew Zajac - Aug 20, 2013 8:28 PM


Michael Jackson’s estate challenged a tax bill calculated by the U.S. Internal Revenue Service, arguing that it overvalued assets including real estate, a Bentley automobile and the late singer’s “image and likeness.”

The estate filed a petition in response to an IRS “notice of deficiency” issued in May regarding the estate’s tax return. All amounts in the document were redacted.

The valuations in the estate’s return “were accurate and based upon qualified appraisals by qualified appraisers who had extensive experience in valuing entertainment industry assets,” according to the petition. It was filed July 26 in U.S. Tax Court in Washington by attorney John Branca and music executive John McClain, the co-executors of Jackson’s estate.

Paul Hoffman, of Hoffman Sabban & Watenmaker, one of the attorneys filing the suit, declined to discuss the sums in dispute, saying only that “the IRS is wrong.”

Jackson died in June 2009 at age 50. His death was ruled a homicide by the Los Angeles County coroner, who said the singer died of acute propofol intoxication.

Conrad Murray, Jackson’s doctor, was convicted of involuntary manslaughter and sentenced to four years in jail.

In addition to real estate, automobiles and intellectual property, the tax court filing takes issue with IRS valuations of a Lloyds of London “contingency non-appearance and cancellation” policy, Jackson’s share of MJJ Ventures Inc. and two trusts and other personal property.

The case is Estate of Michael J. Jackson v. IRS, 17152-13, U.S. Tax Court (Washington).

To contact the reporter on this story: Andrew Zajac in Washington at azajac@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.
 
Michael Jackson’s Estate Challenges IRS in Tax Dispute
By Andrew Zajac - Aug 20, 2013 2:28 PM ET


Michael Jackson’s estate challenged a tax bill calculated by the U.S. Internal Revenue Service, arguing that it overvalued assets including real estate, a Bentley automobile and the late singer’s “image and likeness.”

The estate filed a petition in response to an IRS “notice of deficiency” issued in May regarding the estate’s tax return. All amounts in the document were redacted.

The valuations in the estate’s return “were accurate and based upon qualified appraisals by qualified appraisers who had extensive experience in valuing entertainment industry assets,” according to the petition. It was filed July 26 in U.S. Tax Court in Washington by attorney John Branca and music executive John McClain, the co-executors of Jackson’s estate.

Paul Hoffman, of Hoffman Sabban & Watenmaker, one of the attorneys filing the suit, declined to discuss the sums in dispute, saying only that “the IRS is wrong.”

Jackson died in June 2009 at age 50. His death was ruled a homicide by the Los Angeles County coroner, who said the singer died of acute propofol intoxication.

Conrad Murray, Jackson’s doctor, was convicted of involuntary manslaughter and sentenced to four years in jail.

In addition to real estate, automobiles and intellectual property, the tax court filing takes issue with IRS valuations of a Lloyds of London “contingency non-appearance and cancellation” policy, Jackson’s share of MJJ Ventures Inc. and two trusts and other personal property.

The case is Estate of Michael J. Jackson v. IRS, 17152-13, U.S. Tax Court (Washington).
 
The IRS!?

My reaction:
[YOUTUBE]5IQlJfJpJRc[/YOUTUBE]
 
Didn't mention this on 60 minutes I heard a conspiracy nutter say on twitter. :rolleyes:
 
Michael Jackson estate fights U.S. IRS in Tax Court

By Patrick Temple-West
WASHINGTON | Wed Aug 21, 2013 4:50am IST

Aug 20 (Reuters) - The estate of pop music legend Michael Jackson is fighting the Internal Revenue Service over taxes and penalties levied on a wide range of the star's assets, including the Neverland Ranch, his "image and likeness" and some recording properties, according to court documents.

The estate's challenge, filed in U.S. Tax Court, does not disclose any dollar amounts, suggesting the differences in estate taxes paid and allegedly owed could be significant, said tax lawyers who reviewed the court filings on Tuesday.

The dispute centers on the value of estate assets at the time of Jackson's death on June 25, 2009. Some assets, such as the star's image and likeness, are extremely difficult to value for tax purposes.

Under tax law, the penalties associated with the IRS's allegations could be as high as 40 percent of the difference between the taxes paid and those allegedly owed for some of the items
.
Though dollar amounts in the documents are redacted, the IRS's deficiency notice said the tax agency levied penalties on the value of Sycamore Valley Ranch Company LLC, which includes the Neverland Ranch, according to the court filings.

The IRS issued to the estate a tax deficiency notice in May and the estate filed its challenge in Tax Court on July 26. The IRS has 60 days to respond to the Tax Court challenge.

Negotiators for the IRS and the estate have held meetings for more than a year to try to resolve the valuation differences, said Charles Rettig, one of the lawyers representing the Jackson estate. He declined to say how much in taxes and penalties are in dispute.

"The government believes estates of celebrities likely have a significant audit potential," Rettig said on Tuesday. "The estate believes the estate tax return properly reflected the interests of Mr. Jackson as of the date of his death."
An IRS spokesman declined to comment.

Under Tax Court rules, the Jackson estate will not need to pay any taxes or penalties unless the court rules for the IRS.
Jackson died at age 50 from an overdose of the surgical anesthetic propofol while rehearsing for a series of comeback concerts in London.

"The Michael Jackson estate was on a clear collision course with the Tax Court," said Bridget Crawford, a tax professor at Pace Law School, who reviewed the Tax Court filings. (Reporting By Patrick Temple-West; Additional reporting by Eric Kelsey; Editing by Howard Goller and Ken Wills)

http://in.reuters.com/article/2013/08/20/usa-tax-michaeljackson-idINL2N0GL0YU20130820
 
It's a given (in this country, especially) that there are two certainties we can't escape: death and taxes. The Estate Tax (commonly called the 'death tax') is one of the most unfair and harsh taxes we have to pay. Make no mistake, it isn't just a rich people's tax, either. We literally have to pay to DIE on this side of the Pond and the loved ones (or whoever we make our estate execs) we leave it to can have a real headache on their hands. Lots of paperwork and the IRS can be a cold collector.


Granted, when I bite the big one, I won't be taxed as much as Mike, but I will be taxed. I say it's an unfair and harsh tax because you're paying taxes more than once on earnings/property/assets you've already paid taxes on (in the same tax year).
 
Last edited:
The tax loop holes that the 1% of the population have exclusive rites to, are an abomination to the 99% who do not benefit. Let's hear it for privatization and how the devil is "big government." Those infamous Koch brother's can continue to kill our clean water and our clean air, but heck, they pay 0% tax. Let's kill the Unions because the Koch brother's say so. Let's kill Social Security because the Koch brother's tell us to.

This is where the IRS should turn their attention to, that and the Tea Party funders, like the Koch brother's. Be a billionaire in the US and you don't have to pay any tax. If you don't destroy the environment, you pay a fine, but it's no big deal, you still continue to pollute, but get people to think that "big government" is taking away your rights. My rights are being taken away because these major corporations are not paying tax. The deficit goes up and yet jobs are lost and the rich get richer, even when they are bailed out.

Nope, the IRS is wrong about challenging the Michael Jackson Estate for taxes. Make the major corporations pay the 35% tax and quit thinking by giving the 1% of the population, these billionaires, especially when their address is 740 Park Ave. New York City, NY, tax breaks it will create jobs, because it doesn't. It makes the rich richer. The IRS goes after the 99% for taxes, but not the 1% of the population, who could bring the deficit down in the US, not Michael Jackson's Estate!

Rajs-100429-1199curv8bit.jpg
 
Michael Jackson's Estate To IRS: Beat It

It’s possible that the legacy of Michael Jackson could turn out to be a string of court cases. He has kept lawyers and business managers happily employed since he died – and his tax lawyers are no exception. The estate for the King of Pop is planning to go to the mattress in the fight against the Internal Revenue Service over taxes and penalties assessed as a result of values reported on his federal estate tax return.

Michael Jackson died on June 25, 2009, in Los Angeles, California. The federal estate tax exemption amount was $3,500,000 for decedents dying in 2009. That means that estate assets in excess of that amount are taxed.

For federal purposes, estate tax is calculated on the net value of the assets in the control of the decedent as of the date of death. There is an election available to use the values as of six months after the date of death, as well. That election is referred to as AVD, or alternate valuation date, and is intended to account for the potential drop in the value of a decedent’s estate due to fluctuations in the market or a drop in the value of the businesses owned by the decedent. That drop can happen to ordinary taxpayers like you and me but it’s not the case for Michael Jackson who remains firmly near the top of Forbes’ list of Top Earning Dead Celebrities.

Taxes payable as a result of the death of the decedent are the responsibility of the estate. Even though Jackson’s will requires most of the taxes due to be paid out of his trust, the executors of the estate are legally responsible for filing and arranging for the payment of taxes. That’s why, as a practical matter, the estate is suing the IRS. The case has been captioned (after an August 14, 2013 amendment) Estate of Michael J. Jackson, Deceased, John G. Branca, Co-Executor and John McClain, Co-Executor, Petitioner(s) v. Commissioner of Internal Revenue, Respondent (017152-13 U.S. Tax Court) and was filed in U.S. Tax Court.

So why all the fighting? Jackson’s estate was said to have been valued between $80 million and $500 million. That’s, er, a lot of disparity. And that’s exactly the problem.

The estate has valued the assets at lower amounts than the IRS believes to be appropriate. A number of assets are said to be at issue including Neverland Ranch, automobiles and amounts attributable to the singer’s image, likeness and intellectual property.

Remember what I said earlier about the tax being imposed on the value as of the date of death? That would seem to mean that future dollars aren’t taxable, right? Well, not exactly. For purposes of the federal estate tax, the ability to receive future payments is a valuable right. For tax purposes, the value is the projected future worth discounted to the present day – or in simple terms, what a third party would pay today for the right to receive those payments in the future. In most cases, this calculation is figured on average annual earnings over a period of time (often five years).

This is easy when earnings are somewhat stable, as in the case of Elvis, who continued to earn a steady stream of income even when he wasn’t performing.

But it’s more difficult when a star’s earnings rise and fall, as in the case of Michael Jackson. Just before his death, Jackson was thought to be spending more than he was making. According to the New York Times, in the early 2000s, Jackson blew through literally hundreds of millions of dollars of loans and lines of credit – those loans were guaranteed by assets owned by Jackson. In that same time period, he only produced one studio album, the ironically titled Invincible, which would go on to sell only half of his 1995 effort, HIStory: Past, Present and Future, Book I, and only a fraction of his mega-block buster album, Thriller. Jackson was hit by scandal after scandal at the time – and even as he was planning his controversial comeback tour – it was clear that he wasn’t the entertainer he used to be. His death, accelerated by drug use including propofol and benzodiazepines, and allegations about his health and lifestyle only add to the suggestion that the singer’s stage presence would likely not have been as remarkable as it once was. How do you place a value on his projected earnings when it’s hard to understand how the public might react to him?

The estate used an appraiser, of course. A qualified appraiser would take into consideration of those factors: reputation, star power and encumbrances on his earning potential. I’m guessing that the appraisal came back on the low side, based on an argument for date of death values. The estate is likely going to argue that the singer’s future earning power was actually depressed and the subsequent boon to the estate, while nice, could not have been predicted as of the date of death.

Looking at how well the estate is doing now, however, the IRS likely takes a much different position. The estate has been pulling in considerable dollars: $170 million in 2011 and $145 million in 2012. The singer has earned more than any single living artist since his death. In fact, his estate made so much money after his death that it was anticipated that the singer’s debts would be paid in full at the end of 2012.

How the public viewed Jackson likely also affects the valuation of his assets. Which valuation do you use, for example, for Neverland Ranch: the date of death value for the bizarre, neglected and poorly maintained site marred by scandal and allegations of child abuse? Or the singular home of the now practically canonized King of Pop?

It’s an interesting set of questions. The valuations associated with “ordinary people” are much easier to assess because they are generally black and white. It boils down to a question of willing buyer and willing seller. But, with celebrities, it’s a more difficult issue because so much of the value of an item is tied to how we view the celebrity. And over time, we forget about the bad stuff, including the scandals, the violence and the addictions. Sometimes, at death, the drunk becomes the artistic genius; the control freak becomes the industry icon and the thug was, we learned, really just misunderstood. The same is true for Jackson: now, it’s not so creepy to be the teenage boy waxing on about Michael Jackson a la Justin Bieber.

Resolving this case won’t be as simple as pulling up a Kelley Blue Book value or finding a historic stock price. Valuation is subjective. And it’s clear that the IRS and the estate don’t see eye to eye on a number of issues. At stake is not just taxes and a few thousand dollars of interest: if the estate is found to have misrepresented the value of items on the return, penalties could run as high as 40%.

As is the rule with individual tax matters, the IRS has not issued a comment. Jackson’s legal team stands firmly behind their court filings.

As for Jackson, with cases still pending in civil court and now this one in U.S. Tax Court, the star who was notoriously private during his lifetime has become one of the most talked about celebrities after his death.

http://www.forbes.com/sites/kellyphillipserb/2013/08/21/michael-jacksons-estate-to-irs-beat-it/
 
Bubs these forbes write up always irritate me. For a publication that is supposed to focus on the wealth or wealthy & pretends to be business oriented, the writers tend to love to wallow in tabloid adjectives & sensationalism in their narratives.
 
^Totally agree, ghastly article - could she be more pejorative if she tried. And what planet is she on if she thinks mj has been practically canonised since his death? Clearly not this one. It reveals she thinks the correct state of affairs is if mj is reduced solely and completely to a creepy caricature with no ref at all to his talent.

Re the story about the tax dispute, i'm sure 99% of readers are extremely puzzled as they have constantly and consistently been told by the media that mj died 100s of $millions in debt, so how could he be owing any taxes at all.
 
U.S. agency says Michael Jackson estate owes $702 million in taxes


inShare
Share this

Email
Print
Related News
Blackstone targets up to $5 bln for new European fund -source
Mon, Aug 19 2013
U.S. IRS debuts online registration for firms ahead of FATCA law
Mon, Aug 19 2013
Analysis & Opinion
Tying up loose ends after filing your income tax returns
How safe are GO bonds?
Related Topics
Entertainment »
Fashion »
Music »
U.S. pop star Michael Jackson gestures during a news conference at the O2 Arena in London March 5, 2009 file photo. REUTERS/Stefan Wermuth
By Patrick Temple-West
WASHINGTON | Fri Aug 23, 2013 5:15pm EDT
(Reuters) - The estate of pop music legend Michael Jackson owes $702 million in federal taxes and penalties, the Internal Revenue Service charged in U.S. Tax Court, accusing the estate of undervaluing some of the star's assets by hundreds of millions of dollars.

The dollar amounts in dispute had not been previously disclosed in the court challenge that the Jackson estate filed in July to a bill from the IRS, the U.S. tax-collecting agency.

At issue is the wide difference between what the estate said Jackson's legacy was worth versus what the IRS determined was its taxable value.

An IRS spokesman and lawyers for the estate declined to comment.

Jackson died on June 25, 2009, the date of the estate tax return. His estate's beneficiaries are Jackson's mother, Katherine, his three children and charities.

The estate's 2009 tax filing said the total Jackson estate had a $7 million taxable value. In May, the IRS issued the estate a tax deficiency notice for $505.1 million in taxes and $196.9 million in penalties, according to Tax Court documents dated Tuesday.

Jackson's image and likeness were valued by the IRS at $434 million. The estate said its taxable value was $2,105.

The largest taxable item was the estate's stake in some of Jackson's recording assets, listed as MJ/ATV Publishing Trust interest in New Horizon Trust II, which was valued at $469 million by IRS. It was not valued in the 2009 estate filing.

The IRS's alleged tax deficiency also includes some items that were overvalued by the estate.

A Jackson estate spokesman said the IRS's appraisal values "were based on speculative and erroneous assumptions unsupported by the facts or law." The Jackson estate has paid $100 million in taxes, he said on Friday.

Under Tax Court rules, the Jackson estate will not need to pay any taxes or penalties unless the court rules in favor of the IRS.

Jackson died at age 50 from an overdose of the surgical anesthetic propofol while rehearsing for a series of comeback concerts in London.

(Reporting by Patrick Temple-West; Editing by Kim Dixon, Howard Goller and Bill Trott)

http://www.reuters.com/article/2013/08/23/entertainment-us-usa-tax-jackson-idUSBRE97M0YN20130823
 
Why The $702 Million IRS Tax Claim On Michael Jackson's Estate Won't Stand Up
Comment Now Follow Comments
English: Michael Jackson 2nd June 1988. "...
Who's Bad? Perhaps the numbers behind the $702 million IRS claim against Michael Jackson's estate.

Michael Jackson has earned over half a billion dollars since his death–and now Uncle Sam wants a piece of the action.

Earlier today reports surfaced saying that the IRS is hitting Jackson’s estate with a $702 million bill, including $505.1 million in taxes and $196.9 million in penalties.

The estate will not be forced to pay any penalties unless the court rules in favor of the IRS, but those in charge of Jackson’s empire were nonetheless displeased with the news.

“The executors are disappointed the IRS continues to overreach in this matter but firmly believes all issues will be resolved in favor of the estate and the beneficiaries,” said attorney Howard Weitzman in a statement, which also noted that the estate has paid over $100 million in taxes and is “in full compliance with the tax laws.”

An IRS spokesperson declined to comment, citing Section 6103 of the tax code, which prevents the organization from discussing individual tax situations.

So will the estate actually end up having to fork over $702 million to Uncle Sam? It seems unlikely for a number of reasons, and the proverbial devil is in the details.

14 images
Photos: The Top-Earning Dead Musicians 2012

Michael Jackson's New Vegas Show 'One' Will Double The Fun
Zack O'Malley GreenburgZack O'Malley Greenburg
Forbes Staff

Thriller at Forbes: The No BS! Brass Band Attacks
Zack O'Malley GreenburgZack O'Malley Greenburg
Forbes Staff

My Next Book: Michael Jackson, Inc.
Zack O'Malley GreenburgZack O'Malley Greenburg
Forbes Staff
First of all, it’s important to understand that the IRS’s claims are related to estate tax, not income tax. In 2009, the year Jackson passed away, the maximum federal rate was 45% of net assets–implying that the IRS believes Jackson was worth in the neighborhood of $1.5 billion at the time of his death.

Though the King of Pop was a much savvier businessman than most people realize and amassed an incredible collection of assets throughout his career, he was most certainly not a billionaire on June 25th, 2009. He did not appear on FORBES’ list of billionaires that year, or any other year, for that matter.

Jackson did hold hundreds of millions of dollars in assets, namely his 50% share in the Sony SNE +2.54%/ATV catalogue, which industry experts believed to be worth as much as $750 million at the time (and is worth far more now). There were other entities, too, including his Mijac music catalogue, real estate and a massive art collection.

But Jackson also carried nearly half a billion dollars in debt, meaning that his net assets were well under $1 billion–and likely less than the $702 million tax bill proposed today. The reports also suggest that a major component of the IRS bill revolves around the value of Jackson’s image and likeness. The tax agency is said to have put that number at $434 million, while the estate valued the rights at $2,105.

Though the latter seems very low, the former seems incredibly high–at the time of Jackson’s death, anyway–given the fact that the singer hadn’t scored an endorsement deal since 1993 and didn’t crack FORBES’ list of top-earning musicians in 2008, a year in which the Police earned $115 million to claim the top spot.

To be sure, the value of just about everything Jackson-related has skyrocketed in the years following his death. His image is once again a force to be reckoned with in the endorsement world, landing on everything from Pepsi cans to slot machines. Two Jackson-themed Cirque du Soleil tours are currently running–Michael Jackson One in Las Vegas and the Michael Jackson Immortal World Tour around the globe–and his music seems as popular as ever.

But estate taxes are levied on the value of assets at the time of death, not at the time the tax bill is issued or announced. And as a result, it seems unlikely that the tax court will rule in favor of the IRS getting its $702 million.

Of course, the whole issue would have been moot had Jackson died a year later: due to a legal quirk, there was no estate tax in 2010.

http://www.forbes.com/sites/zackoma...aim-on-michael-jacksons-estate-wont-stand-up/
 
This seems such a big difference:

Jackson's image and likeness were valued by the IRS at $434 million. The estate said its taxable value was $2,105.

How could there be such a large discrepancy--from 434million vs $2,105?

Is Zack a tax expert? Every time Zack speaks or writes, he always mention that Michael was not on a list of Forbes billionaires. I think the estate will have to pay some more money. Maybe not that crazy amount that the IRS wants, but more than the 100 million that the attorney said they had already paid.

This tax issue makes me think about something. People focus on Michael's debt and then compare that to what he owns and what money he had coming in. Now the IRS is really looking at what his image is worth. I don't think many of those who write about how Michael was in debt ever spent much analysis on his image/name, and yes I know about the allegations. However, writing his name in an article causes papers/magazines to make more money, even before he died. From the way the estate has paid millions on attorneys around the world to safeguard the pirating of his name/image, it shows that this is a valuable asset.
The IRS must know the record time in which Michael's shows sold out in 09 before his death, so did they consider that in trying to consider what his image was worth?

By the way I am so glad that according to that law the IRS cannot discuss our tax issues with the media. I don't even understand why they would contact the IRS for a comment anyway.

Part of me is happy that the IRS feels the values are higher. It is gives me a good feeling that I could say Michael was not as valueless as everyone said. At the same time, I am worried because it would mean that the estate has to find more money to pay a higher tax bill.
 
Last edited:
^^

well they can't pay $702 Million. They earned $145 Million gross in the last accounting period. So there's no way for them to be able to pay $702 Million unless they sell an asset. What happens is a payment plan is done, such as paying the whatever the tax amount over a number of years. Of course then you also need to add interest to it - around 3% I believe.

so basically if you don't have the money to pay it, it becomes like a debt with interest you pay over time.
 
The story stinks. If MJ Estate owes $505m in tax, excluding the penalties, it means that the IRS thinks MJ was worth ($505m/0.45) $1.12 billions at the time of death. and that is not true considering that MJ had a huge debt of more than $400m. Plus his image was nowhere near the hundreds of millions the IRS is charging even though he sold out the O2 arena.
 
$1.12 billions at the time of death. and that is not true considering that MJ had a huge debt of more than $400m

------------------------

maybe they are going by the court docs from around 07 when he refinanced that said he was worth approx that

you do have to laugh though at how depending on ppls agendas either mjs broke or hes worth over a billion.
 
Wish people could make their minds up - he either died with astronomical debts - he was a billionaire. They cannot have it all ways!
 
passy001 said:
The story stinks. If MJ Estate owes $505m in tax, excluding the penalties, it means that the IRS thinks MJ was worth ($505m/0.45) $1.12 billions at the time of death. and that is not true considering that MJ had a huge debt of more than $400m. Plus his image was nowhere near the hundreds of millions the IRS is charging even though he sold out the O2 arena.
Click to expand...

Maybe his image was not as low as some think, since it was still being used to make millions of dollars for magazines & the media. Michael sold out the O2 in a few minutes, and I think it was Randy who said that they could have sold it even more, so maybe the IRS is calculating that if such a man could make X amount sales in 1/2 an hour, then for one year they could make millions.

I think Michael's image was worth more than the estate filed, but in no way as high as the IRS. It would be so interesting to see how the IRS calculated this. It is a fact that accountants undervalue assets for tax purposes. There was a great article on the forum that showed how Movie companies routinely show loss of profit so they would not have to pay out too much. I think that expert, being paid as usual, undervalued the assets to help his client, which actually was not very helpful to his client at all. Maybe we will get the information once it goes to court. I mean the IRS has been dealing with dead stars for decades.
 
...And so the story continues with even more vivid details to sort through...

Michael Jackson’s Bentley Valued at $250,000 by IRS: Taxes

How much would you pay for a Bentley Arnage driven by pop icon Michael Jackson? The IRS says the car is worth $250,000. The Internal Revenue Service is seeking more than $700 million in tax penalties from Jackson’s estate, and after a U.S. Tax Court challenge last month from the estate, the government has now released valuations on everything from the car to his business interests and property. The IRS valued his estate at more than $1.1 billion and said executors significantly undervalued his property, resulting in a tax deficiency of more than $505 million and additions to tax of more than $196 million, Bloomberg BNA reported.
The estate filed a petition July 26 challenging the deficiencies and penalties, and the specific dollar amounts were redacted. The IRS response last week included a non-redacted copy of the government’s deficiency notice. A publicist for Jackson’s estate disputed the IRS’s positions and questioned the appraisal methodology the IRS used. In a statement, Howard Weitzman, an attorney for the estate, said the executors are “disappointed the IRS continues to overreach in this matter but firmly believes all issues will be resolved in favor of the Estate and the beneficiaries.” Of particular note is the different valuation of Jackson’s “image and likeness.” While the estate claimed a value of a mere $2,105, the IRS determined a value of more than $434 million.

Value Test
Attorney Adam Streisand, head of Loeb & Loeb LLP’s trusts and estate litigation department in Los Angeles, told BNA the issue is what the estate’s assets were worth at the time Jackson died, not what the IRS says they are worth after his death. “There is really no debate” that Jackson’s death positively impacted the value of his image and likeness, Streisand said. “Michael’s name and image had a commercial value after and because of his death that it did not have during life.”
While the IRS does test the value based upon subsequent events, the executor is entitled to value the property based on what was known on the valuation date, not on circumstances that one might speculate might exist in the future, Streisand said. The general method for valuing a person’s image and likeness when they die is to use an income-stream model where the executor “forecasts the income streams to be earned in the future and applies a capitalization rate to reach a present value,” he said.

Trust Accounts
In addition to the questions about the value of Jackson’s image and likeness, the singer’s estate and the IRS had very different takes on the value of two trust accounts -- New Horizon Trust II and New Horizon Trust III. While the estate claimed Jackson’s interests in those trusts to be zero and $2.2 million respectively, the IRS valued them at $469 million and $60.68 million. Two trust accounts -- New Horizon Trust II and New Horizon Trust III -- also had differing valuations. While the estate claimed Jackson’s interests in those trusts to be zero and $2.2 million respectively, the IRS valued them at $469 million and $60.68 million. Among the other notable assets that the IRS said the estate has undervalued are: real property located in Encino, California, valued by the estate at $4.1 million, compared with $5.5 million by the IRS; Jackson’s ownership interest in MJJ Ventures Inc., valued by the estate at $13.7 million compared with $81.1 million by the IRS; and Jackson’s ownership interest in Sycamore Valley Ranch Co., valued by the estate at zero, compared with $1.7 million by the IRS.

The Bentley
They also include a 2001 Bentley Arnage valued by the estate at $91,600, compared with $250,000 by the IRS; Jackson’s “share of artist mechanical rights related to Jackson 5 master recordings,” valued by the estate at $11.19 million, compared with $45.49 million by the IRS; tangible personal property valued by the estate at zero, compared with $47.46 million by the IRS; and a contingency non-appearance and cancellation policy issued by Lloyd’s of London, valued by the estate at zero, compared with $17.5 million by the IRS. The IRS also disallowed $17 million claimed as debts to “other creditors.”

http://www.bloomberg.com/news/2013-...s-bentley-valued-at-250-000-by-irs-taxes.html

minutes18n-3-web.jpg
 
Attorney Adam Streisand, head of Loeb & Loeb LLP’s trusts and estate litigation department in Los Angeles, told BNA the issue is what the estate’s assets were worth at the time Jackson died, not what the IRS says they are worth after his death. “There is really no debate” that Jackson’s death positively impacted the value of his image and likeness, Streisand said. “Michael’s name and image had a commercial value after and because of his death that it did not have during life.”
While the IRS does test the value based upon subsequent events, the executor is entitled to value the property based on what was known on the valuation date, not on circumstances that one might speculate might exist in the future, Streisand said. The general method for valuing a person’s image and likeness when they die is to use an income-stream model where the executor “forecasts the income streams to be earned in the future and applies a capitalization rate to reach a present value,” he said.

Adam Streisand used to be Katherine's lawyer before Perry Sanders?

In addition to the questions about the value of Jackson’s image and likeness, the singer’s estate and the IRS had very different takes on the value of two trust accounts -- New Horizon Trust II and New Horizon Trust III. While the estate claimed Jackson’s interests in those trusts to be zero and $2.2 million respectively, the IRS valued them at $469 million and $60.68 million. Two trust accounts -- New Horizon Trust II and New Horizon Trust III -- also had differing valuations. While the estate claimed Jackson’s interests in those trusts to be zero and $2.2 million respectively, the IRS valued them at $469 million and $60.68 million. Among the other notable assets that the IRS said the estate has undervalued are: real property located in Encino, California, valued by the estate at $4.1 million, compared with $5.5 million by the IRS; Jackson’s ownership interest in MJJ Ventures Inc., valued by the estate at $13.7 million compared with $81.1 million by the IRS; and Jackson’s ownership interest in Sycamore Valley Ranch Co., valued by the estate at zero, compared with $1.7 million by the IRS.

How come the estate valued Encino $4.1 miliion but no value on Neverland?


They also include a 2001 Bentley Arnage valued by the estate at $91,600, compared with $250,000 by the IRS; Jackson’s “share of artist mechanical rights related to Jackson 5 master recordings,” valued by the estate at $11.19 million, compared with $45.49 million by the IRS; tangible personal property valued by the estate at zero, compared with $47.46 million by the IRS; and a contingency non-appearance and cancellation policy issued by Lloyd’s of London, valued by the estate at zero, compared with $17.5 million by the IRS. The IRS also disallowed $17 million claimed as debts to “other creditors.”[/i]

Can IRS put the tax on something that is not even sure yet, I mean that Lloyds has not paid that 17.5 million but it is not even sure whether they pay it?
 
Bubs they have Neverland in there. It is called by the other name: and Jackson’s ownership interest in Sycamore Valley Ranch Co., valued by the estate at zero, compared with $1.7 million by the IRS.

Yeah why would they put the Lloyd insurance in? Are they saying that in 09 before they knew about the drug requirements, that the policy had a value of 17.5 million on the books?

I have a feeling that the estate has undervalued Michael's assets significantly for tax purposes. Some of the zeros I question. Is the estate saying that because there is a loan on an asset, the value is zero?

This situation is not going to make the reporters & analysts happy, especially those who see the KOP value as peanuts before his death. They will be writing more articles showing why the IRS is wrong.
 
@Petrarose

I do see Neverland is there but they put no value to it at all, but Encino was valued $4.1 million?

real property located in Encino, California, valued by the estate at $4.1
Jackson’s ownership interest in Sycamore Valley Ranch Co., valued by the estate at zero

That ownership intrest is not the same as real property?

"Of particular note is the different valuation of Jackson’s “image and likeness.” While the estate claimed a value of a mere $2,105, the IRS determined a value of more than $434 million."

While I'm happy that IRS has valued MJ's image and likeness $434 million (as a fan it should be even higher:)), but certainly understand the the estate wants keep everything as low as possible.
IRS is nearly as bad as Jackson family, they are looking for money that isn't there and doesn't belong to them, vultures:)
 
Bubs the estate says the value is zero, and I don't know why. They have something else valued at zero too. I know on the books the Vatican list the art of the Vatican as $1 because they claim it belongs to the people and you really can't put a value on it. At least that is what I learned years ago. I don't know if this has changed. Mamefan is an accountant so maybe she can explain about zero values.

The IRS like to go after money. I find this rather interesting though, because this is a person who the AEG experts claim had only debts up to 09. Even the Forbes brains and all media people see Michael as having low value due to debts & allegations. I really hope we could follow this case.
 
"Value Test
Attorney Adam Streisand, head of Loeb & Loeb LLP’s trusts and estate litigation department in Los Angeles, told BNA the issue is what the estate’s assets were worth at the time Jackson died, not what the IRS says they are worth after his death. “There is really no debate” that Jackson’s death positively impacted the value of his image and likeness, Streisand said. “Michael’s name and image had a commercial value after and because of his death that it did not have during life.”

While the IRS does test the value based upon subsequent events, the executor is entitled to value the property based on what was known on the valuation date, not on circumstances that one might speculate might exist in the future, Streisand said. The general method for valuing a person’s image and likeness when they die is to use an income-stream model where the executor “forecasts the income streams to be earned in the future and applies a capitalization rate to reach a present value,” he said."

I'm confused here.

So which is the correct way to report the value, by reporting the value at time of death or by basing the value on future earnings?
 
You must log in or register to reply here.
Back
Top