Michael Jackson’s Estate Challenges IRS in Tax Dispute

[myosotis]

I vaguely remember the 'Hussein' perfume case. Here's a link to refresh memories (Report dated 6 Feb 2012):

http://www.telegraph.co.uk/finance/...hael-Jackson-perfume-strikes-a-sour-note.html

A court showdown over an investment loan promises to cast a spotlight on the business affairs of Mr Wright-Phillips and his business partner, the designer and convicted fraudster Arfaq Hussain, also known as HRH Arfaq.
The two men are behind a company that is being sued by London-based investor Richard Dawes over the non-payment of a loan. According to legal papers, the cash was advanced to the company, HRH Kingdom Holdings, to fund the development of a “Michael Jackson perfume”.
The business plan appears to be the latest in a line of projects devised by Mr Hussain to cash in on high-value fashion, especially when that fashion has a link to Mr Jackson.
Mr Hussain claims to have had close links with the late pop star, having designed outfits for him, including the trademark gloves he wore to his concerts.
His success in designing for Mr Jackson led Mr Hussain to create V1, hailed at the time as the world’s most expensive perfume.

The perfume came in a gold-and-diamond-encrusted bottle, with each one carrying a £47,500 price tag.
When Mr Hussain was jailed for fraud in 2002, the court heard he had not sold a single bottle of V1.

In the court case, Mr Hussain was accused of taking out loans he never intended to pay back, to support the development of the V1 perfume. However, after borrowing thousands of pounds, Mr Hussain indulged in a spending spree, buying luxury cars and expensive clothes. Although he was found not guilty of the offences relating to the loans, he was jailed for falsifying documents to banks in order to get credit.

In the current case, Mr Dawes is suing HRH Kingdom Holdings for £130,000 in relation to his unpaid loans. In the legal papers, he claims that he lent the money “towards the production of the Michael Jackson perfume”.

The writ states that “despite the claimant’s repeated demands and promises from the defendant to make payments…the defendant has failed to make the repayment”.
Mr Wright-Phillips’ level of involvement with HRH Kingdom Holdings is uncertain. He is listed as a director and is a shareholder alongside Mr Hussain.
Two other companies the footballer has been involved with recently, S.E.4 Promotions and SLS Enterprises, have both been dissolved.

A spokesperson for Mr Wright-Phillips declined to comment. Mr Dawes declined to comment. Mr Hussain did not return calls.
-------------------------------------------------------------------------------------------------------------

This is fun:
http://www.independent.co.uk/life-style/interview-arfaq-hussain-off-the-wall-1178796.html

I've always had a complete fascination with perfume," says Arfaq. "I love the romance and that type of thing. OK, so some people might be shocked at the idea of paying pounds 50,000 for a bottle of perfume, but we're not aiming for a day-to-day perfume and we're not aiming for day-to-day clients. These jewels are created for people who have everything, Bentleys, Ferraris, Sunseeker yachts, private jets. I know people who will spend half a million pounds on a watch and this is going to make you smell like those people!"

Fair enough. This is exactly the premise that sells billions of gallons of Chanel or Versace. "If I was coming from Milan or New York," reasons Arfaq, "nobody would turn a hair. But when you come from Yorkshire, it's just not the same."

He has a point. The House or, to be brutally accurate, the bungalow, of Gianni Vive Sulman, sits opposite a flour refinery in Birstwith, a village near Harrogate. In New York or Milan, the scrupulous beige interior with its Dralon three-piece suite and lace antimacassars would doubtless be read as le dernier cri in postmodern wit, though it might be harder to argue the case for the black ceramic cats flanking the electric fire. Prints of Michael Jackson in shiny military garb line the walls, while a printed acknowledgement from the Queen's private secretary expressing Her Majesty's pleasure at receiving Christmas greetings from Gianni Vive Sulman and sending hers right back takes pride of place in a clip frame on the windowsill. A similar message, on better-quality card, from the King of Morocco, is also on display. And, of course, there is The Healing Hand, shimmering away in its corner. Of Gianni Vive himself, however, there is no sign.

"Well, it's me." says Arfaq. "I didn't think Arfaq was a designer name. With Gianni Vive Sulman, you get a bit of Italian, a bit of French and a bit of Muslim. And it looks nice written on the labels."

----------------------------------------------------------------------------------
There were cufflinks at $39 K too:
http://www.alux.com/most-expensive-cufflinks-world/3/
Arfaq Hussain’s V2 Cufflinks: $39,007

Also:
http://hrharfaq.net/

https://www.linkedin.com/in/hrharfaq
Personal Manager
Michael Jackson
2008 – 2009 (1 year)

Private Secretary
Michael Jackson
2006 – 2008 (2 years)

V1 perfume launch (see from 6 mins). This seems to have been created 'for a prince' (Not MJ?). However other articles indicate this was the perfume sold to MJ (and possibly to Ms Taylor, and a certain Mr D Trump)

<iframe width="560" height="315" src="https://www.youtube.com/embed/YVyYC__9EQk" frameborder="0" allowfullscreen></iframe>

 

[redfrog]

I think IRS want to make MJ into some kind of negative example. This case just reeks :no:

What do you mean? It wasn't MJ who undervalued his assets it was his Estate.
I agree that both sides are shady or worse. The IRS coming up with those exorbitant numbers, they never did that with any other celebrity. It really looks like they just want to ruin the Estate because it's Michael Jackson's Estate.

 

[jaydom7]

^^

Final ruling will be available. Most of the transcripts would be experts talking about financials and valuation calculations.

so the trial is over? Has the judge decided the verdict?

 

[Annita]

so the trial is over? Has the judge decided the verdict?

It`s not over. It just started and will go a few weeks.

 

[Annita]

OK I see everyone's point.....at the moment I'm on the fence, because I think both sides are shady and will throw MJ under the bus in order to win...it always seems to me that MJ is always being put on trial. I think I feel this way because of all the past and future court cases eg. Robson etc And one can't help to think that the estate is using the child abuse angle to lowball MJ's worth, while at the same time I think IRS want to make MJ into some kind of negative example. This case just reeks :no:

I really do not get what you say. Is it not a fact that the allegations and the negative press Michael and his reputation had severely damaged. Should the estate ignore it as if it not the were case. I also do not understand what you say regarding the IRS. I think their direction is clearly to represent Michael as an icon with huge possessions and possibilities at every corner to earn money alone his image and likeness and his estate tries to cover it up in order for not paying nearly a billion dollars tax.

That said, I really do not like the trial either because it was clear the estate must represent the miserable financial situation of Michael at the time of his death.

 

[ivy]

Greenberg Atty Explains Michael Jackson Estate&#8217;s IP Moves

Law360, Los Angeles (February 8, 2017, 11:12 PM EST) -- Michael Jackson&#8217;s estate Wednesday called Greenberg Traurig LLP&#8217;s entertainment practice co-chair to testify about the estate's efforts to protect and expand Jackson's intellectual property rights after his death, in the trial to determine if the estate owes the IRS hundreds of millions of dollars for undervaluing its assets.

During the third day of the three-week trial before U.S. Tax Judge Mark Holmes in Los Angeles, the estate called to the stand Vincent Chieffo, the co-chair of Greenberg&#8217;s national media and entertainment practice, to testify about the work he had done helping the estate protect its trademarks, copyrights and publicity rights. The value of those publicity rights, also known as name and likeness rights, have been hotly contested in the estate&#8217;s dispute with the Internal Revenue Service, with the two sides being nearly $160 million apart in their respective valuations of the rights at the time of Jackson&#8217;s death in 2009.

Under direct examination by Robert Horwitz of Hochman Salkin Rettig Toscher & Perez PC, representing the estate, Chieffo testified about how he was brought in as part of the legal team assembled in the days after Jackson's death, and that after attorney John Branca and Jackson's childhood friend John McClain were named co-executors, Chieffo and his colleagues began a multipronged effort to protect and expand the estate's intellectual property rights.

Chieffo said that when Jackson died, he had only two active registered trademarks in the U.S., having let other marks lapse or abandoning them, and so the estate not only had to begin sending cease-and-desist letters and filing lawsuits against entities that were now selling rip-off merchandise or claiming a right to use Jackson's name and likeness, but also had to file dozens of new trademarks to actually be able to capitalize on the King of Pop's image.

&#8220;[The estate's legal team was] growing and expanding the business of the estate from what it was when Michael died, so as to create what&#8217;s called secondary meaning&#8230; and create more value in the estate than was there when Michael died,&#8221; he said.

Things got heated shortly before the conclusion of Chieffo&#8217;s direct testimony, however, when Chieffo was testifying about a cease-and-desist letter he had sent to an attorney, Laurence Nimmer, who had made and was selling an unauthorized Michael Jackson documentary comprised of footage he obtained while working for criminal defense attorneys that represented Jackson in a 2005 trial on child molestation charges.

IRS attorney Donna Herbert objected to the estate introducing into evidence an email sent by Nimmer, purportedly in response to Chieffo&#8217;s cease-and-desist letter, to attorney Paul Gordon Hoffman &#8212; who is representing the estate in the tax trial &#8212; and to Nimmer&#8217;s brother, noted copyright expert David Nimmer.

&#8220;Mr. Nimmer isn&#8217;t in the courtroom,&#8221; she said. &#8220;&#8216;We could call Mr. Hoffman but then he&#8217;d have to recuse himself.&#8221;

The estate&#8217;s attorney Steven Toscher of Hochman Salkin Rettig Toscher & Perez asked Herbert if she meant from the instant proceeding, and when she responded in the affirmative, he leaped to his feet in protest.

&#8220;And we could call Ms. Herbert and she could be excluded; let&#8217;s get on with it,&#8221; he said. &#8220;This is ridiculous.&#8221;

Judge Holmes ruled that the email would not be admitted into evidence, and the direct examination was concluded.

Jackson&#8217;s estate had petitioned the tax court in July 2013, challenging a lengthy notice of deficiency the IRS mailed to the estate that month. The notice contested the estate&#8217;s reported valuation of a litany of items, including a 2001 Bentley Arnage and rights to the master recordings of the Jackson 5.

According to the notice, the IRS adjusted the value of the estate from $7 million to $1.32 billion. As a result, the agency demanded $702 million, including $505.1 million in deficiencies and $196.9 million in accuracy-related penalties.

The most notable discrepancy between the valuations of the parties as highlighted in the notice included the right to Jackson&#8217;s image and likeness. The IRS originally pegged that asset at $434.3 million, whereas the estate had claimed the right was worth only $2,105.

In the run-up to the trial, the IRS continued adjusting its proposed value of the estate, increasing the assessed value of Jackson's Mijac music catalog &#8212; which held the singer's own songwriting copyrights &#8212; by tens of millions of dollars, but revising its proposed value of Jackson's name and likeness upon his death to $161 million.

During Monday's opening statements, Avram Salkin of Hochman Salkin Rettig Toscher & Perez PC, representing the estate, said that at the time of Jackson's death, his estate was burdened with over $400 million in debt and that the name and likeness rights were only worth $3 million. Salkin also said that the IRS had overvalued the Mijac catalog by roughly $90 million and Jackson's half-share of music publishing company Sony/ATV by $200 million. Jackson's estate sold that share to Sony for $750 million last year.

On Wednesday, before calling Chieffo, the estate called to the stand Matt Forger, a sound engineer who worked with Jackson during his life, and then had helped the estate go through unreleased material after the singer&#8217;s death to determine what songs might be viable for later commercial release.

The IRS has contended in the trial that the estate undervalued significantly the value of the unreleased material, while the estate has countered that these songs were unreleased for a reason, and could not have been expected to be smash hits.

Forger testified that IRS expert Wes Anson&#8217;s assessement that the estate had eight to 10 albums worth of unreleased material at its disposal at the time of Jackson&#8217;s death was predicated on assuming all of the unreleased masters were in shape to be released, when many were &#8220;recordings of fragments of songs.&#8221;

IRS attorney Jordan Musen cross-examined Forger, asking him to confirm that the estate was in possession of songs that Jackson had completed before his death, and that simply hadn't been included on the albums they were originally recorded for.

&#8220;They were not included because Michael did not feel they were of the quality of the ones that were included,&#8221; Forger responded.

 

[mkgenie]

Judge Holmes said this was fine, but granted Weitzman's request that Branca not be recalled until next week, so that he can handle the business of &#8220;Grammy's week,&#8221; which Branca said includes the filming of a tribute to his clients The Bee Gees and his receiving an award for the record sales of Jackson's albums' &#8220;Thriller&#8221; and &#8220;Bad.&#8221;

hmmm?

 

[ChrisC]

Judge Holmes said this was fine, but granted Weitzman's request that Branca not be recalled until next week, so that he can handle the business of &#8220;Grammy's week,&#8221; which Branca said includes the filming of a tribute to his clients The Bee Gees and his receiving an award for the record sales of Jackson's albums' &#8220;Thriller&#8221; and &#8220;Bad.&#8221;

hmmm?

Is the inference that this award has something to do with the Grammys themselves?

It's sad to hear these stories again about Michael's situation in the final years of his life.

 

[elusive moonwalker]

Unfortunatly the estate have to make mj look as bad as possible inorder to disprove the IRS claims of what is owed.first time ive ever heard of a near bankrupt having to pay knocking on a billion $ in tax. ?

 

[redfrog]

Unfortunatly the estate have to make mj look as bad as possible inorder to disprove the IRS claims of what is owed.first time ive ever heard of a near bankrupt having to pay knocking on a billion $ in tax. &#65533;&#65533;

First time you can read a headline like this too:

Michael Jackson's estate in £800 million tax battle due to star's uncontrollable spending habit

:crazy

What his spending habit has to do with Branca undervaluing his name and likeness they don't explain.
The problem is that 90% of the Sun's readers are too dumb to see that headline makes absolutely no sense

 

[#MJforever57]

So unfair and sad to see.

 

[redfrog]

So unfair and sad to see.

Can you believe that some fans want the IRS to win? They think if the IRS bankrupts
the Estate somehow that would be good for MJ's legacy. How ridiculous.
If the IRS wins the media will pin it on MJ not Branca and Weitzman. Nobody cares about Branca and Weitzman except fans.
The general public will just ridicule MJ once again. And Branca would still remain the executor, wouldn't he?


The media keeps talking about 700 million or even 1 billion in taxes and penalties, but that's impossible
when the IRS's final numbers put the value of the Estate, or at least the disputed part of it, at about 480 million.

The Estate apparently made tons of money selling MJ merchandise
but only after MJ's death. I don't see how this declaration would support the IRS's position since the question
is how much MJ was worth at the time of his death, but they wanted the judge to see it:

https://www.scribd.com/document/120...Sebacious-Felix-Bravado#fullscreen&from_embed

 

[barbee0715]

I don't understand how the IRS can still say Estate owns 700 million in 500m in taxes and 200m in penalties
when their finale numbers put the value of the Estate, or at least the disputed part of it, at about 480 million.

It says on the last line that the deficiencies and the penalties are BEFORE the concessions made by both parties. So that's the ORIGINAL figure they first came up with.

 

[#MJforever57]

IMO if this was not Michael Jackson you would not see this. IRS want the money that bad.

 

[redfrog]

It says on the last line that the deficiencies and the penalties are BEFORE the concessions made by both parties. So that's the ORIGINAL figure they first came up with.

Yeah I figured it out since and edited my post
The media keeps reporting the wrong numbers.

IMO if this was not Michael Jackson you would not see this. IRS want the money that bad.

Absolutely. They never did this with any other celebrity. If they can't destroy MJ anymore they want to ruin his Estate and legacy.
The irony is that the IRS wants to do all that by talking him up and dismissing the effects of allegations and the media's relentless bullying.
Having said I just don't get how Branca&co. came up with these values:

 

[barbee0715]

Yeah I figured it out since and edited my post
The media keeps reporting the wrong numbers.

True.

Absolutely. They never did this with any other celebrity. If they can't destroy MJ anymore they want to ruin his Estate and legacy.

I have a feeling that if the IRS has any kind of success with this, we will see them go after other celebrities estate tax-hard.

 

[redfrog]

I have a feeling that if the IRS has any kind of success with this, we will see them go after other celebrities estate tax-hard.

Probably. Still they looked at MJ's 1 billion+ Estate and thought like Evan Chandler: we want a piece of that pie and it's Michael Jackson
so we can say the most ridiculous things and get away with it. Like in 2009 he could have earned 400 million by just cashing in on his name and likeness. Utter nonsense. Then they revise it down to 161 million. Did MJ actually earn that money? His Estate earned it after he died. They want to tax an asset which MJ himself didn't even have.

 

[Annita]

What about reports about friday and monday? Did nothing happen or was it just not intresting enough to report for the media.

 

[barbee0715]

^^Its been interesting to me, so far. I hope they continue to report. I was surprised we didn't hear anything new yet.

 

[redfrog]

What about reports about friday and monday? Did nothing happen or was it just not intresting enough to report for the media.

Zia Modabber testified (MJ fired him for negligence during the Awran case but now he is the Estate's lawyer) Modabber with the help of Weitzman dragged MJ through the mud. He even claimed that MJ once overdosed on painkillers
which I never heard from anyone before. Estate is throwing whatever they can at MJ to establish that he was worth virtually nothing before he died.


This fan is in the courtroom every day and tweeting live about the testimonies.
https://twitter.com/TeamMichael777


She confronted Modabber after he left the courthouse, Modabber
was not happy about it:
https://twitter.com/TeamMichael777/status/831321583411093504

I can't decide which side is the bigger crook, Branca/Weitzman or the IRS.
Sony ATV with hundreds of thousands of songs was worth 1.1 billion in 2009. But IRS thinks
MIJAC with about 500 songs was worth 114 million?

 

[Goddess4Real]

Zia Modabber testified (MJ fired him for negligence during the Awran case but now he is the Estate's lawyer) Modabber with the help of Weitzman dragged MJ through the mud. He even claimed that MJ once overdosed on painkillers
which I never heard from anyone before. Estate is throwing whatever they can at MJ to establish that he was worth virtually nothing before he died.


This fan is in the courtroom every day and tweeting live about the testimonies.
https://twitter.com/TeamMichael777


She confronted Modabber after he left the courthouse, Modabber
was not happy about it:
https://twitter.com/TeamMichael777/status/831321583411093504

I can't decide which side is the bigger crook, Branca/Weitzman or the IRS.
Sony ATV with hundreds of thousands of songs was worth 1.1 billion in 2009. But IRS thinks
MIJAC with about 500 songs was worth 114 million?

Has the IRS cross-examined these witnesses?

 

[Goddess4Real]

Zia Modabber testified (MJ fired him for negligence during the Awran case but now he is the Estate's lawyer) Modabber with the help of Weitzman dragged MJ through the mud. He even claimed that MJ once overdosed on painkillers
which I never heard from anyone before. Estate is throwing whatever they can at MJ to establish that he was worth virtually nothing before he died.


This fan is in the courtroom every day and tweeting live about the testimonies.
https://twitter.com/TeamMichael777


She confronted Modabber after he left the courthouse, Modabber
was not happy about it:
https://twitter.com/TeamMichael777/status/831321583411093504

I can't decide which side is the bigger crook, Branca/Weitzman or the IRS.
Sony ATV with hundreds of thousands of songs was worth 1.1 billion in 2009. But IRS thinks
MIJAC with about 500 songs was worth 114 million?

Thanks I would say both for different reasons. However, with Branca/Weitzman its lot worse because they are the MJ Estate and in order to win, they are throwing MJ under the bus with all this crap (and MJ is not here to defend himself). This pisses me off because didn't Randy Phillips say that their was such a huge demand for MJ in 2009 they could have sold out 100 shows in the UK. Its just so annoying to see people in MJ's life in the last 7 years whether its family, friends or business associates chop and change their stories when it suits bloody them......and its usually designed to bask in his shine or make $$$$$ off of him...or cover their asses like Branca etc seems to be doing right now in this stupid lawsuit.

 

[marc_vivien]

Taaj Malik is a joke. LOL.
She don't understand what she is tweeting.

Supported, of course, by B_Marco, MJAP, and their conspiracy narrative, mixing likeness and image and selling tickets, etc.

 

[redfrog]

Has the IRS cross-examined these witnesses?

Yes. They asked this question from Moddaber:

JUST ONE QUESTION> Estate spent millions on lawsuits to protect #MichaelJackson image/Likeness? Yes.
On asset worth $2150.00

Anti-Branca folks consider this a body blow but those lawsuits were after MJ's death.
The IRS shouldn't pretend that MJ's death didn't change the value of his name and likeness. It did.

LOL at Taj Malik and the nutcases like B_Marco being used here as a credible source.

I only look at Marco's timeline for documents like which witness will be called
and what numbers the IRS came up with. Unfortunately we don't have anyone else at the trial but
Malik. At least she recognizes that if the IRS wins MJ's kids lose which Marco does not.
She's a little extreme but that doesn't mean she lies about everything. I don't think
she is making up the lawyers' questions on the fly.

 

[redfrog]

I read about this supposed "dragging of MJ through the mud" on another board. The supposed "dragging" is things like the Estate saying Invincible sold less than previous albums or that the child abuse allegations and his changing appearance negatively affected his image.
Whether we like to hear about such things or not they are simple facts. That's not to say the Estate agrees with those opinions or that treatment of MJ by the media or the public, but it is simply a fact, unless you deliberately want to be in denial about them and think that during Invincible MJ was just as popular as during Thriller.

I was not referring to those things but Modabber's story that MJ had a "serious addiction to painkillers" and he overdosed in 2002.
Assuming that Malik didn't make all that up I would certainly call that dragging through the mud not the least because it's not true
and even if it was it has nothing to do with the value of name and likeness in 2009 so no need to bring it up.
Weitzman and Moddaber just wanted to plant this idea of MJ being an out of control junkie in the judge's head.

Doesn't he mean 1993? Again, as unpleasant as it is to hear about those things, that is not something that is something new or that will do anything to ruin the public image of MJ now. So I don't get the disproportionate fake outrage here by these "fans".

He was talking about the Marcel Avram case that MJ was supposed to testify but couldn't because he overdosed.
No way such an incident could have been kept under the radar all these years especially since an overdose is a serious medical emergency. And even if he had overdosed and somehow had managed to hide it from the public, how would a totally unknown incident in 2002 affect the value of his name and likeness in 2009?

The irony is that the very same people supported MJ's family in the AEG trial where, by these standards, there was at least as much "dragging of MJ" as there is now. All of a sudden now they get all sensitive about the Estate saying things like his changing appearence negatively affected his image but the same people support Katherine tooth and nail - the same Katherine who on live television said her son's nose was like a "toothpick".

Yeah they are totally fine with that lawsuit when it was just another round of MJ bashing and a virtually unwinnable case anyway. Katherine apparently joined the club of nose-based bullying. Good thing MJ didn't hear it.

And Taaj in that video is an embarrasment to MJ fans IMO.

I don't care about her. If she put words in his mouth she is more than an embarrasment.
But if she told the truth Moddaber should not exaggerate Mj's drug problem to begin with and if he does he shouldn't be anywhere near the MJ Estate. He is profiting from the very man he slandered in court.

 

[myosotis]

Thanks I would say both for different reasons. However, with Branca/Weitzman its lot worse because they are the MJ Estate and in order to win, they are throwing MJ under the bus with all this crap (and MJ is not here to defend himself). This pisses me off because didn't Randy Phillips say that their was such a huge demand for MJ in 2009 they could have sold out 100 shows in the UK. Its just so annoying to see people in MJ's life in the last 7 years whether its family, friends or business associates chop and change their stories when it suits bloody them......and its usually designed to bask in his shine or make $$$$$ off of him...or cover their asses like Branca etc seems to be doing right now in this stupid lawsuit.

Selling tickets is only part of the story (and anyway relate to MJ as a musician, not his 'name and likeness'). The shows had not been seen...and two weeks were already postponed before MJ died. Fans were upset. Plans didn't seem to be going well. The most 'viral' photos of MJ that year (before the TII announcement) had been of MJ looking frail, being pushed in a wheelchair.

As regards MJ's 'name and likeness' value in June 09, his age (as well as the things that had happened to him during life, like the burn accident, the false allegations and the vitiligo) were all factors that counted against major companies seeing him as a figure who would enhance their brand and increase sales. MJ was getting 'too old' for the younger mass market to want to look or smell like him (re. clothes and perfume), and older people are generally targetted with more expensive items like watches...but MJ was known for accusing the head of his current contractual company for being 'evil'...so that must have worried potential future 'contractors'. Not to mention the court cases that latterly seemed to follow in the wake of contracts (eg Dieter and the 'Mystery' drinks etc, the 'Kingdom' contract). The marketing of 'name and likeness' is a very competitive issue (there are plenty of other celebs / stars that companies can choose, eg sportspeople and lifestyle celebs), and current value can change in an instant...and sadly death is one of the 'instants' that can make a big change. (There is a certain irony that you can only become 'immortal' - ie everliving- after you are dead.....)

I don't really understand the protests. Won't Katherine also potentially lose out if the IRS clean out the Estate's bank balance? Surely her payments (and any additional discretionary payments for future health needs) need to be protected too? Isn't the Estate just doing their job in trying to protect MJ's assets for his beneficiaries? (Oh, I forgot, the protestors don't agree that the beneficiaries are the correct people...)

I understand that had MJ died in 2010, the tax laws would have been very different, and that no 'death taxes' at all would have been payable?

 

[MJTruth]

Selling tickets is only part of the story (and anyway relate to MJ as a musician, not his 'name and likeness'). The shows had not been seen...and two weeks were already cancelled before MJ died. Fans were upset. Plans didn't seem to be going well. The most 'viral' photos of MJ that year (before the TII announcement) had been of MJ looking frail, being pushed in a wheelchair.

As regards MJ's 'name and likeness' value in June 09, his age (as well as the things that had happened to him during life, like the burn accident, the false allegations and the vitiligo) were all factors that counted against major companies seeing him as a figure who would enhance their brand and increase sales. MJ was getting 'too old' for the younger mass market to want to look or smell like him (re. clothes and perfume), and older people are generally targetted with more expensive items like watches...but MJ was known for accusing the head of his current contractual company for being 'evil'...so that must have worried potential future 'contractors'. Not to mention the court cases that latterly seemed to follow in the wake of contracts eg Dieter and the 'Mystery' drinks etc, the 'Kingdom' contract). The marketing of 'name and likeness' is a very competitive issue, and current value can change in an instant...and sadly death is one of the 'instants' that can make a big change.

I don't really understand the protests. Won't Katherine also potentially lose out if the IRS clean out the Estate's bank balance? Surely her payments (and any additional discretionary payments for future health needs) need to be protected too? Isn't the Estate just doing their job in trying to protect MJ's assets for his beneficiaries? (Oh, I forgot, the protestors don't agree that the beneficiaries are the correct people...)

I understand that had MJ died in 2010, the tax laws would have been very different, and that no 'death taxes' at all would have been payable?

Yes the MJ Estate is doing it's job.
It's an unusual position though because the job of the Estate executors is to maximise the Estate's value for it's beneficiaries and this would typically mean doing everything in their power to portray MJ as a desirable asset.
in this case it's unfortunate that in order to maximise the Estate's value at this time they have to pay as little tax as possible, so in this case they have to tell the story of how low MJ's image and likeness was valued in 2009. In a way it's fortunate that MJ died shortly BEFORE the 'This Is It' concerts started because if they had been successful it is possible that MJ's image and likeness may have increased in value, particularly if he had been a willing participant in promoting himself properly (unlikely considering he rarely did any promo). As the IRS valuation should take into account the value at the time of death then it should be very low. Although the MJ Estate valuation seems far too low at just over $2000, there doesn't seem to be any evidence that MJ had (or was about to) sign any deals with any company to use his image or likeness. Also, he had not been active in any such deals in many years prior to his death. MJ knew the value of using his image and likeness and had made many, many successful deals with some of the world's largest companies throughout his life, even as part of the J5. His deals with the likes of Pepsi and LA Gear in the 80s and 90s were massive. It's clear that after the 93 allegations those kind of deals almost stopped, with only a couple I can think of in Germany and Japan in the late 90s. Also, MJ's changing appearance meant that companies were not going to be interested in using his image to promote products. Even Sony stopped using MJ's photo in promotion! Vince, Blood, The Ultimate Collection, King of Pop, MJ's Vision, This Is It. None used MJ's photo on the front cover. 'The Essential' used an older photo from the Thriller days, and Number Ones did similar with photos from different eras, so there was some residual value in photos from the old days. The Estate valuation appears to ignore this fact. There was always fondness for OWT, Thriller and BAD era MJ, so I'm sure MJ could always have made money from his image and likeness from those eras, and that alone would push the value to more than $2000.

If I had known in 2009 that I could strike a deal for MJ's image and likeness for around $2000 then I would have! I'm sure if MJ had made people aware that his image and likeness were for sale for $2000 many, many companies would have snapped the rights up in no time. That tells me the valuation is too low.

 

[myosotis]

The Estate valuation appears to ignore this fact. There was always fondness for OWT, Thriller and BAD era MJ, so I'm sure MJ could always have made money from his image and likeness from those eras, and that alone would push the value to more than $2000.

.

I agree, but before putting up maybe $0.5million investment in designing and marketing something for sale, the 'contractor' would seek current evidence that the item was likely to succeed in sales terms (as profit is only a small proportion of the actual sales takings). So I think that 'evidence' that the investment was worthwhile (in the light of recent sales), would (as you rightly state) be almost impossible to find.

 

[marc_vivien]

Michael Jackson’s Image Was In ‘Nuclear Winter’: Expert

By Daniel Siegal

Law360, Los Angeles (February 15, 2017, 10:42 PM EST) -- Michael Jackson’s estate on Wednesday called a business appraisal expert to testify at the Los Angeles tax trial over the estate's value at Jackson’s death, with the expert testifying that child molestation allegations had plunged the singer's publicity rights into “nuclear winter,” reducing their value to just $3 million.

During the second week of the trial before visiting U.S. Tax Judge Mark Holmes, the estate called to the stand business appraisal expert Jay Fishman, the managing director of Financial Research Associates, to explain how he had settled on the $3.078 million number for Jackson’s publicity rights. The value of those publicity rights, also known as name and likeness rights, has been hotly contested in the estate’s dispute with the Internal Revenue Service, with the estate saying the IRS has claimed they were worth $161 million at the time of Jackson’s death in 2009.

Under examination by Steven Toscher of Hochman Salkin Rettig Toscher & Perez PC, representing the estate, Fishman first went through his background, and how he went from being a small business value appraiser to something of a specialist in celebrity name and likeness appraisals. Fishman has been called on to value the publicity rights of Nicole Kidman, Tom Cruise, Rudy Giulani and Bryant Gumbel as part of those celebrities’ respective divorce proceedings’, he said, and was retained by businesses to value both Muhammad Ali’s and Marilyn Monroe’s publicity rights.

Fishman said that while Ali was able to sell 80 percent of his publicity rights for $52 million in 2008, he hadn’t used that as a comparison when valuing Jackson’s rights — noting that the business that purchased Ali’s rights eventually wrote down the purchase and sold the asset for only $12 million, and adding that this occurred even with Ali, who has a clean personal reputation and is viewed as a “hero.”

Jackson, while an entertainment icon, was unfortunately not viewed the same way by the public at the time of his death, as child molestation accusations in 1993 and 2003 — culminating in a 2005 criminal trial in which Jackson was acquitted on all counts — had irreparably damaged his reputation, Fishman said. Fishman added that even compared to other scandal-tainted celebrities, Jackson’s alleged crimes were so heinous as to render him untouchable for name and likeness deals at the time of his death.

“I’ll only say it once, there are taints and then there are taints, there are Kobe Bryant type of taints, or I had Kate Moss, and then there are things with children ... those things are nearly impossible to overcome,” he said. “I call it like being in a nuclear winter.”

Jackson’s estate had petitioned the tax court in July 2013, challenging a lengthy notice of deficiency the IRS mailed to the estate that month. The notice contested the estate’s reported valuation of a litany of items, including a 2001 Bentley Arnage and rights to the master recordings of the Jackson 5.

According to the notice, the IRS adjusted the value of the estate from $7 million to $1.32 billion. As a result, the agency demanded $702 million, including $505.1 million in deficiencies and $196.9 million in accuracy-related penalties.

The most notable discrepancy between the valuations of the parties as highlighted in the notice included the right to Jackson’s image and likeness. The IRS originally pegged that asset at $434.3 million, whereas the estate had claimed the right was worth only $2,105.

In the run-up to the trial, the IRS continued adjusting its proposed value of the estate, increasing the assessed value of Jackson's Mijac music catalog — which held the singer's own songwriting copyrights — by tens of millions of dollars, but revising its proposed value of Jackson's name and likeness upon his death to $161 million.

During last week’s opening statements, Avram Salkin of Hochman Salkin Rettig Toscher & Perez PC, representing the estate, said that at the time of Jackson's death, his estate was burdened with over $400 million in debt and that the name and likeness rights were only worth $3 million. Salkin also said that the IRS had overvalued the Mijac catalog by roughly $90 million and Jackson's half-share of music publishing company Sony/ATV by $200 million. Jackson's estate sold that share to Sony for $750 million last year.


https://www.law360.com/articles/892763/michael-jackson-s-image-was-in-nuclear-winter-expert

 

[mj_brainiac]

True.


I have a feeling that if the IRS has any kind of success with this, we will see them go after other celebrities estate tax-hard.

Aren't they going after Whitney's estate as well?

They took control of Sammy Davis Jr.'s estate after he passed