Michael Jackson’s Estate Challenges IRS in Tax Dispute

[Annita]

and it's taken off calendar because Estate and IRS is trying to settle all or parts of the dispute...

So it seems they will not try to settle. Will it go back for a trial date?

 

[Petrarose]

Now we have to wait for those experts to give their views on whether the new valuation is accurate.

 

[Bonnie Blue]

I think it is clear that his worth was not great in 09 re value of his brand b/c AEG was worried re sales and were shocked at the demand, and regular (not VIP) prices were for TII were ridiculously low ($70 per ticket), which is maybe part of why the demand was so great. Even though the demand was huge, the O2 is a small venue and can only hold so many (15k I think) compared to a larger stadium (like Azteca in Mexico City).

I'm not sure why fans wd all of a sudden start arguing that mj's quite extraordinary record breaking feat of selling out the 02 in one city a hundred times or more is down to it being a small venue or cheap seats. It was an amazing achievement and showed mj was still one of the top global elite in terms of being a draw as a live performer at the end of his life despite everything that had been thrown at him, so why should we even try to lessen that success. As i understand it mj's image and likeness isn't related to how much he wd make on tour, the issue i wd say is significant for image and likness purposes is that despite it being THE tour of the year, massive in publicity terms and ticket sales, aeg cd find no commercial sponsor for tii. No corporation wanted to be associated with mj. In fact i can't think of any corporation that used mj's image and likeness after 93, all his sponsorship deals dried up i think. Certainly can't imagine he had any in the last years of his life - and that as far as i understand it, altho i cd be wrong, is how you measure the value of somebody's image and likeness rights. I suppose mj had new deals with bravado re t shirts and other stuff just before he died for the tii tour, but to be brutal were american stores awash with mj t shirts before he died?

 

[Petrarose]

^^I can't remember seeing a lot of MJ t-shirts in the stores in the US, even during Thriller. It was not something that he was doing on a large scale even then.

Does the IRS consider having big sponsors and being connected to large corporations as the major criteria to determine the value of an artist image & likeness? They always have very technical definitions about things, which I have found out from dealing with them.

 

[ivy]

As i understand it mj's image and likeness isn't related to how much he wd make on tour, the issue i wd say is significant for image and likness purposes is that despite it being THE tour of the year, massive in publicity terms and ticket sales, aeg cd find no commercial sponsor for tii. No corporation wanted to be associated with mj. In fact i can't think of any corporation that used mj's image and likeness after 93, all his sponsorship deals dried up i think. Certainly can't imagine he had any in the last years of his life - and that as far as i understand it, altho i cd be wrong, is how you measure the value of somebody's image and likeness rights. I suppose mj had new deals with bravado re t shirts and other stuff just before he died for the tii tour, but to be brutal were american stores awash with mj t shirts before he died?

You are correct that TII isn't really related to image and likeliness valuation directly but it might still be used as a factor. I'll explain

In TII people were paying to see Michael perform so that's why the ticket sale numbers or possible revenues are irrelevant to the image and likeliness valuation. However image and likeliness calculation for tax purposes has a future value aspect as well (for several years depending on the state) and it's possible that IRS might use the success of TII ticket sales as a sign that Michael would also had image and likeliness revenues.

To clarify for example Marlon Brando Estate looked to his earnings from image and likeliness for the last 10 years of his life and assumed he would earn money from his image and likeliness for 10 years after his death and showed that as their valuation.

As for MJ Estate with $2105 valuation, it's obvious to me that they are using past revenues to calculate possible future revenues. You are right that Michael's most successful endorsement was with Pepsi for $30 Million (which had a performance element to it), Michael had merchandise (but no fan knows if that was profitable or not). However these were stopped sometime between 93 and 97. He also had many failed projects such as dispute with LA Gear, Mystery drink and his company with Dieter. So I think Estate is using all of this information from past and saying he wouldn't have had much future revenue as well. The $400 Million number from IRS to me signals that they think interest to TII tour shows that the above conditions would change and MJ would have revenues from image and likeliness.

 

[barbee0715]

delete double post

 

[barbee0715]

^^I can't remember seeing a lot of MJ t-shirts in the stores in the US, even during Thriller. It was not something that he was doing on a large scale even then.

Does the IRS consider having big sponsors and being connected to large corporations as the major criteria to determine the value of an artist image & likeness? They always have very technical definitions about things, which I have found out from dealing with them.

I think you all have somewhat summarized the arguments for both sides of this case in the last few posts: IRS will point out the sell out crowds, and the massive tickets sales for the TII concert; while the Estate will probably point out the house size, cost of a ticket, and no corporate sponsor would touch him at the time. AEG was taking a big chance, for someone who had been through what he had, and not been on the stage for quite a few years. Remember, it's is worth at time of death, not the day after-which skyrocketed.

 

[barbee0715]

So it seems they will not try to settle. Will it go back for a trial date?

I think they will still try to settle-they're just adding more pressure.

 

[elusive moonwalker]

Its an intresting discussion putting aside the whole IRS thing. considering who mj was he wasnt one for doing lots of indorsements or having many t.shirts etc etc. and bar i guess thriller era it was never really"cool" to like him. its kinda ironic that the media have done whatever they could to help him lose the cats etc over the years but they and their actions are the one thing helping the estate keep then.

the argument can go on forever about what the likeness etc was/would be worth.no one knows what would could have happened post TII but i think its a reach basing it all off TII when logically wouldnt u think for example the whole previous decade would be used as a scale.

by hook or by crook they will get the cats one way or the other

 

[ivy]

well as some of these valuations aren't exact and could go either way, the most likely outcome is they would settle - or the judge would determine- the tax to be somewhere in the middle.

 

[Bonnie Blue]

The $400 Million number from IRS to me signals that they think interest to TII tour shows that the above conditions would change and MJ would have revenues from image and likeliness.

I think it would be a weak argument from irs then. It was in march that it was clear that tii was a huge draw, by june there was still no hope of anyone sponsoring the tour. Is there any evidence that mj got flooded with sponsorship deals and companies dying to get associated with him in the last months of his life? I just don't see it, i feel the child molestation allegations, the trial and the perpetual agenda the tabloid media waged against him made him a complete no go for all those celeb endorsements that other stars get. We had that evidence in the aeg trial of some survey advertisers do, forget the name of it - q score(?), to determine the positive/negative aspects of particular individuals - and mj's was way negative. It actually makes me so mad that a country can preside over a complete character assasination of someone, and yet for tax purposes can try and argue that person's image was really worth half a billion $.

AEG was taking a big chance, for someone who had been through what he had, and not been on the stage for quite a few years.

What big chance, Aeg were going to get their $ back, mj was bankrolling the tour. Other outfits wanted mj, sponsors might not have wanted to be associated with him as they are concerned with image but that didn't mean concert promotors didn't know what a huge draw mj still was - selling tickets was never a problem for mj as he has a big fanbase, it was his image to the general public that was the problem.

 

[#MJforever57]

I agree also that AEG was taking a big chance on Michael because you got to remember it has been over 10 years sense Michael has been on stage it was a big risk.

 

[#MJforever57]

well as some of these valuations aren't exact and could go either way, the most likely outcome is they would settle - or the judge would determine- the tax to be somewhere in the middle.

That would be the best way to do it imo.

 

[barbee0715]

I think it will settle but I hope the amount is not outrageous. The IRS is really pushing these valuations knowing full well it's not credible as of day of death. They just want a decent settlement.
I do think the Estate went low but not outrageously so.

 

[#MJforever57]

I hope so so we can end this too.

 

[Bonnie Blue]

I think it will settle but I hope the amount is not outrageous. The IRS is really pushing these valuations knowing full well it's not credible as of day of death. They just want a decent settlement.
I do think the Estate went low but not outrageously so.

Is it just valuations that's the issue? I haven't checked but i thought the cost against some of the assets like the catalogue was $0. It's highly unlikely that mj managed to procure a loan around 2004/05 which exactly matched what the catalogue was worth 5 years later so i just assumed the $0 valuations were because the assets were in inheritance tax protected trusts and the irs were somehow arguing that they weren't. I can't believe that mj was the only multimultimillionaire (or billionaire acc to the irs) in the world to not protect his assets from 40% (?) inheritance tax. What was he paying all those financial advisers/accountants for?

 

[ivy]

Is it just valuations that's the issue?

yes

I haven't checked but i thought the cost against some of the assets like the catalogue was $0. It's highly unlikely that mj managed to procure a loan around 2004/05 which exactly matched what the catalogue was worth 5 years later so i just assumed the $0 valuations were because the assets were in inheritance tax protected trusts and the irs were somehow arguing that they weren't.

they aren't in inheritance trusts. they are valued 0 due to debts. and it doesn't need to be an exact match, an equal or MORE debt would also be shown as zero. In other words if you have an asset that is $10 and if you have a debt of $12, the taxable value would be 0. Also the $0 amount might make sense if you believe the news stories that Michael borrowed to the max. If you are getting a loan by showing an asset as collateral the max you can get is the value of the asset.

I can't believe that mj was the only multimultimillionaire (or billionaire acc to the irs) in the world to not protect his assets from 40% (?) inheritance tax. What was he paying all those financial advisers/accountants for?

there was a plan for such inheritance protected trusts but the debts is the reason why the assets weren't in such trusts. Michael did not transfer the ownership of those assets to a trust,he kept the ownership and used them to take loans. As far as I know you cannot transfer the ownership of assets to a trust and then take a loan on them for your own personal benefit. Trusts are set for a number of beneficiaries and a single beneficiary/trustee using trust assets for their personal benefit could be problematic.

 

[Bonnie Blue]

they aren't in inheritance trusts. they are valued 0 due to debts. and it doesn't need to be an exact match, an equal or MORE debt would also be shown as zero. In other words if you have an asset that is $10 and if you have a debt of $12, the taxable value would be 0. Also the $0 amount might make sense if you believe the news stories that Michael borrowed to the max. If you are getting a loan by showing an asset as collateral the max you can get is the value of the asset.

I do think mj was at the end of the road re getting loans on his assets but i thought that was more due to his ability to pay the servicing of the loan, not that he was at 100%plus of the value of his asset. What loan company would offer a loan at over 100% of the value of the asset esp to someone seen at least in the media as a bankrupt risk - that wd be a bit nuts even for pre-sub prime crash times. I'm assuming that the asset wd be worth more in 2009 than in 2004/5, whenever the loan was taken out. Also, i was under the impression that mj left $300m or something like that when he died, certainly not $7m. So i just assumed that there was some debate with the irs what shd or shdn't be counted for inheritance tax purposes.

there was a plan for such inheritance protected trusts but the debts is the reason why the assets weren't in such trusts. Michael did not transfer the ownership of those assets to a trust,he kept the ownership and used them to take loans. As far as I know you cannot transfer the ownership of assets to a trust and then take a loan on them for your own personal benefit. Trusts are set for a number of beneficiaries and a single beneficiary/trustee using trust assets for their personal benefit could be problematic.

That makes sense, that wd be the case in the uk.

 

[barbee0715]

This article about Robin Williams leaving his intellectual rights-image, etc. to a charity referenced that this could be a direct reaction to the Michael Jackson Estate/IRS battle. So I'm posting it here.http://www.hollywoodreporter.com/thr-esq/robin-williams-restricted-exploitation-his-785292

It also mentions the hologram, but I decided to put it here. If moderators think it should be moved, please do so.

[h=1]Robin Williams Restricted Exploitation of His Image for 25 Years After Death[/h]<figure class="blog-post__media" style="box-sizing: border-box; margin: 0px 0px 0px 212px; padding: 0px; border: 0px; font-family: RobotoTHR, sans-serif; font-stretch: inherit; line-height: 24px; font-size: 16px; vertical-align: baseline; overflow: hidden; color: rgb(0, 0, 0);">

<figcaption class="blog-post__image-info" style="box-sizing: border-box; margin: 0px; padding: 0px; border: 0px; font-family: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; font-stretch: inherit; line-height: 1; vertical-align: baseline; color: rgb(137, 137, 137);"> AP Images/Invision</figcaption></figure><aside class="blog-post-features" style="box-sizing: border-box; margin: 0px auto 1em 1em; padding: 0px; border: 0px; font-family: RobotoTHR, sans-serif; font-stretch: inherit; line-height: 24px; font-size: 16px; vertical-align: baseline; float: right; width: 300px; overflow: hidden; color: rgb(0, 0, 0);">

<iframe id="google_ads_iframe_/6419/thr.com/esq.article_1" name="google_ads_iframe_/6419/thr.com/esq.article_1" width="300" height="250" scrolling="no" marginwidth="0" marginheight="0" frameborder="0" style="box-sizing: border-box; margin: 0px; padding: 0px; border-width: 0px; font-family: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; font-stretch: inherit; line-height: inherit; vertical-align: bottom;"></iframe>
​

</aside><aside class="blog-post-deck" style="box-sizing: border-box; margin: 0px 0px 0px 212px; padding: 0px; border: 0px; font-family: RobotoTHR, sans-serif; font-stretch: inherit; line-height: 24px; font-size: 16px; vertical-align: baseline; float: left; width: calc(100% - 528px); color: rgb(0, 0, 0);"><summary class="blog-post-summary" style="box-sizing: border-box; margin: 0px; padding: 0.5em 0px; border: 0px; font-family: TabletGothicCompressed-light, impact, sans-serif; font-style: inherit; font-variant: inherit; font-weight: inherit; font-stretch: inherit; line-height: 1.2em; font-size: 1.8em; vertical-align: baseline;">How Robin Williams made a move that Michael Jackson hadn't &#8212; and what other celebrities can learn from it.</summary></aside><article class="blog-post-body" data-tracklabel="Inline Link" style="box-sizing: border-box; margin: 0px 0px 0px 212px; padding: 0px; border: 0px; font-family: RobotoTHR, sans-serif; font-stretch: inherit; line-height: 1.75em; font-size: 0.975em; vertical-align: baseline; color: rgb(0, 0, 0);">On Monday, the family of Robin Williams gathers in a San Francisco courtroom in a quarrel over how to divide personal property such as jewelry and memorabilia. Unfortunately, the dispute overshadows one of the more innovative aspects of Robin Williams' estate planning, which just might become a model for other celebrities preparing for their demise. After all, one thing his wife Susan and children Zachary, Zelda andCody won't be discussing in court is intangible property like the late actor's right of publicity.
According to a review of the Robin Williams Trust &#8212; filed as an exhibit last Wednesday &#8212; Williams bequeathed rights to his name, signature, photograph and likeness to the Windfall Foundation, a charitable organization set up by Williams' legal reps at the law firm of Manatt, Phelps.
There are two important facets of this provision.
First, the Trust restricts exploitation of Robin Williams' right of publicity for 25 years after his death. That means, there won't be any authorized advertisements featuring Williams until at least August 11, 2039. The provision also interferes with someone immediately doing, say, a hologram of a Robin Williams standup routine or digitally inserting him into a new film.
READ MORERobin Williams: Widow, Children Clash Over Estate
"It's interesting that Williams restricted use for 25 years," says Laura Zwicker, an attorney at Greenberg Glusker who counsels high net worth individuals on estate and tax planning. "I haven't seen that before. I've seen restrictions on the types of uses &#8212; no Coke commercials for example &#8212; but not like this. It could be a privacy issue."
Or maybe, Williams' reps were aware of novel technologies that have the power of essentially resurrecting dead celebrities &#8212; and hoped to avoid anything that could tarnish his legacy.
The Trust's publicity rights provision is cutting edge in another way.
If the Windfall Foundation is deemed ineligible for a charitable deduction by the Internal Revenue Code, the Trust mandates that Robin Williams' publicity rights be distributed to one or more charitable organizations with a similar purpose (Doctors Without Borders, AIDS, Make-a-Wish, etc.) which qualify for such charitable deductions.
According to insiders, this appears to be a direct reaction to a dispute happening at the moment between the estate of Michael Jackson and the IRS over how to value the late singer's publicity rights for estate tax purposes. The federal government claims the King of Pop's estate owes more than $500 million in taxes from his publicity rights and must also pay almost $200 million more in penalties. The dispute is currently being adjudicated in U.S. Tax Court.
Assigning publicity rights to a tax-advantaged charitable organization could limit his family's tax liability. By doing what he did, Williams not only asserted a measure of control over posthumous exploitation, but he recognized that the value of a celebrity's afterlife has gone up in recent years and made a step to mitigate the IRS' interest in this.
A full copy of the Robin Williams Trust is below.
Email: Eriq.Gardner@THR.com
Twitter: @eriqgardner

</article>

 

[marc_vivien]

https://www.ustaxcourt.gov/UstcDockInq/DocumentViewer.aspx?IndexID=6532095

This case was on the Court's November 17, 2014 trial calendar for LosAngeles, California. Although a very large deficiency is at stake, it raises mostlyvaluation questions. The parties have again reported that they are cooperating ininformal discovery and trying to settle as many issues as possible at IRS Appeals.They reasonably ask to report again in the summer, and it isORDERED that on or before July 2, 2015 the parties shall file a status reportdescribing their progress in settling the case or narrowing the issues to be tried.

 

[ILoveHIStory]

If the MJ's estate owes more than $500 million in taxes from his publicity rights (and must also pay almost $200 million more in penalties) what was THE REAL INCOME/cash? 1 OR 1.5 OR 2 BILLION?

The tax debt is about the money before MJ died=he earned, or after he died=all posthumous income?

 

[Gold Pants Girl]

It's a tax on how much he was worth when he died.

 

[ivy]

Not MJ Related but a good recent example about estate tax dispute

Davidson estate sues Deloitte Tax over $2.7B IRS bill
Mark Hicks, The Detroit News 9:48 p.m. EDT September 24, 2015

The estate of billionaire and former Detroit Pistons owner Bill Davidson is suing an international company&#8217;s tax firm over a recommended plan lawyers claim led to an Internal Revenue Service bill that topped $2.7 billion.

According to the lawsuit filed Thursday in New York state&#8217;s Supreme Court, Deloitte Tax LLP created &#8220;a reckless and grossly negligent estate and tax plan&#8221; for Davidson, who died in 2009 at age 86.

Spurred by a &#8220;strong desire&#8221; to secure him as one of its &#8220;marquee clients,&#8221; the firm failed &#8220;to disclose the numerous material risks&#8221; involved as well as &#8220;created an Estate Plan replete with flawed structures and inherent defects,&#8221; the suit claims.

&#8220;Mr. Davidson was a multibillionaire, prominent professional sports team owner, and philanthropist,&#8221; the filing read. &#8220;Deloitte Tax viewed Mr. Davidson as a client who could both generate large fees, and serve as a prominent showpiece that Deloitte Tax could use to promote its tax services to other high net worth individuals.&#8221;

Deloitte Tax also allegedly told Davidson and his representatives that under its plan he would &#8220;win if he lived, or win if he died.&#8221;

In a statement Thursday night, Deloitte Tax said: &#8220;We ... stand fully behind the services our team provided to Mr. Davidson. We regret that the estate executor has decided to pursue this path. We are prepared to defend ourselves vigorously and are confident we will prevail in this matter.&#8221;

In May 2013, the IRS levied a tax bill on his estate that totaled more than $2.7 billion, the lawsuit stated. Davidson&#8217;s estate went to court to dispute the amount owed; after negotiation, it was obligated to pay more than $457 million in taxes, penalties and interest, the court document read.

&#8220;This amount was in addition to the over $168 million in estate tax and $82 million in gift tax already paid under the assumption that this was the total tax due,&#8221; attorneys wrote in the suit.

Estate representatives are seeking to recover about $500 million in additional estate and gift taxes, related fees, penalties, plus interest, the document stated.

Davidson, of Bloomfield Hills, was chairman, president and CEO of Guardian Industries. Headquartered in Auburn Hills, it is one of the world&#8217;s largest producers of float glass and fabricated glass products used in the automotive industry.

Becoming majority owner of the NBA Pistons in 1974, Davidson went on to launch a sports empire that also once included the WNBA&#8217;s Detroit Shock, NHL&#8217;s Tampa Bay Lightning, IHL&#8217;s Detroit Vipers, and the Detroit Fury arena football team.

Under his ownership, the Pistons and Shock each won three championships. In 2003-04, the Shock, Pistons and Lightning all won league titles, making Davidson the first owner to hold three pro championships concurrently.

In 2008, Forbes reported Davidson&#8217;s net worth was $4.5 billion, making him the richest man in the state.

Davidson also was a world-renowned philanthropist who gave heavily to Jewish and Israeli causes. Attorneys wrote in the lawsuit he was &#8220;responsible for more than $200 million in donations to local and international charities and universities.&#8221;

The Pistons-Palace Foundation, a charity he founded, has donated more than $20 million for youth leadership, athletics and entertainment, the filing said.

 

[Tygger]

Interesting. Allow me to clarify how this situation is similar and how this situation differs in comparison to Michael&#8217;s estate.

Davidson&#8217;s Estate is suing Deloitte Tax to recoup the monies it paid to the IRS. This estate accuses Deloitte of &#8220;a reckless and grossly negligent estate and tax plan.&#8221; It will be interesting to see how this lawsuit is resolved between an estate and an estate planner(s).

With Michael&#8217;s estate, one of his executors was also responsible for his estate and tax plan. Branca as executor cannot sue his own law firm for the predicament Michael&#8217;s estate finds itself in with the IRS. (Branca can however be penalized but, that is a choice for the beneficiaries in the future if they so choose.)

Davidson&#8217;s estate disputed the tax bill levied and settled (negotiations). This is most likely result for Michael&#8217;s estate as well as most IRS cases are settled (negotiations). It is highly unlikely Michael&#8217;s estate will win against the IRS.

 

[ivy]

Don't you think a settlement - in other words paying less than IRS is asking - is also a win? That being said, I imagine everyone here is expecting a settlement. It is the most likely result.

plus while the Davidson Estate is suing the tax firm for Estate planning, it is still a possibility for MJ Estate to sue the tax firm who prepared the estate tax return / valuations etc- if they believe there is a gross valuation/mistakes / errors . The "read between the lines" example here although there was a huge valuation difference ( $250 M Davidson estate paid as estate tax initially and the $2.7 billion Estate tax IRS asked), Davidson Executors wasn't personally in trouble for valuation differences plus Davidson executors choose to pursue the tax firm to recover additional tax amounts paid.

 

[Tygger]

plus while the Davidson Estate is suing the tax firm for Estate planning, it is still a possibility for MJ Estate to sue the tax firm who prepared the estate tax return / valuations etc- if they believe there is a gross valuation/mistakes / errors .

That would be an interesting turn of events! Would you happen to know the tax firm who completed the valuations?

 

[gerryevans]

Not MJ Related but a good recent example about estate tax dispute

Davidson estate sues Deloitte Tax over $2.7B IRS bill
Mark Hicks, The Detroit News 9:48 p.m. EDT September 24, 2015

The estate of billionaire and former Detroit Pistons owner Bill Davidson is suing an international company’s tax firm over a recommended plan lawyers claim led to an Internal Revenue Service bill that topped $2.7 billion.

According to the lawsuit filed Thursday in New York state’s Supreme Court, Deloitte Tax LLP created “a reckless and grossly negligent estate and tax plan” for Davidson, who died in 2009 at age 86.

Spurred by a “strong desire” to secure him as one of its “marquee clients,” the firm failed “to disclose the numerous material risks” involved as well as “created an Estate Plan replete with flawed structures and inherent defects,” the suit claims.

“Mr. Davidson was a multibillionaire, prominent professional sports team owner, and philanthropist,” the filing read. “Deloitte Tax viewed Mr. Davidson as a client who could both generate large fees, and serve as a prominent showpiece that Deloitte Tax could use to promote its tax services to other high net worth individuals.”

Deloitte Tax also allegedly told Davidson and his representatives that under its plan he would “win if he lived, or win if he died.”

In a statement Thursday night, Deloitte Tax said: “We ... stand fully behind the services our team provided to Mr. Davidson. We regret that the estate executor has decided to pursue this path. We are prepared to defend ourselves vigorously and are confident we will prevail in this matter.”

In May 2013, the IRS levied a tax bill on his estate that totaled more than $2.7 billion, the lawsuit stated. Davidson’s estate went to court to dispute the amount owed; after negotiation, it was obligated to pay more than $457 million in taxes, penalties and interest, the court document read.

“This amount was in addition to the over $168 million in estate tax and $82 million in gift tax already paid under the assumption that this was the total tax due,” attorneys wrote in the suit.

Estate representatives are seeking to recover about $500 million in additional estate and gift taxes, related fees, penalties, plus interest, the document stated.

Davidson, of Bloomfield Hills, was chairman, president and CEO of Guardian Industries. Headquartered in Auburn Hills, it is one of the world’s largest producers of float glass and fabricated glass products used in the automotive industry.

Becoming majority owner of the NBA Pistons in 1974, Davidson went on to launch a sports empire that also once included the WNBA’s Detroit Shock, NHL’s Tampa Bay Lightning, IHL’s Detroit Vipers, and the Detroit Fury arena football team.

Under his ownership, the Pistons and Shock each won three championships. In 2003-04, the Shock, Pistons and Lightning all won league titles, making Davidson the first owner to hold three pro championships concurrently.

In 2008, Forbes reported Davidson’s net worth was $4.5 billion, making him the richest man in the state.

Davidson also was a world-renowned philanthropist who gave heavily to Jewish and Israeli causes. Attorneys wrote in the lawsuit he was “responsible for more than $200 million in donations to local and international charities and universities.”

The Pistons-Palace Foundation, a charity he founded, has donated more than $20 million for youth leadership, athletics and entertainment, the filing said.

Wow....thanks for sharing. Deloitte should be sued and the estate should win. No way do you engage a tax firm specialist and still have to pay those kinds of monies. The whole reason for engaging them is to cover yourself so that nothing like this happens.

Side note: I worked once for a wealthy individual. He had a fraction of Davidsons' wealth, but there were three of the accounting firm CPA's working on his account and a clerk that came in once a week to cut all checks, and he was charged over a hundred dollars an hour for their services and more than a hundred grand a year and again, he was small time compared to Davidson. But when he was audited, he owed nothing. Deloitte undoubtedly made millions off this account, probably had a small army of their personnel working on it. No way should their client's estate been as vulnerable as it apparently was and there is no excuse they can really offer to justify this humongous consequence of their recommendations and actions. They certainly did not do their job.

But Deloitte is one of the most respected accounting companies in the world. Makes me think of all the respected and reputed pros associated with MJ in all areas, and realize all over again, you just never never know where to turn or who you can genuinely count on when you need help.

 

[#MJforever57]

Don't you think a settlement - in other words paying less than IRS is asking - is also a win? That being said, I imagine everyone here is expecting a settlement. It is the most likely result.

plus while the Davidson Estate is suing the tax firm for Estate planning, it is still a possibility for MJ Estate to sue the tax firm who prepared the estate tax return / valuations etc- if they believe there is a gross valuation/mistakes / errors . The "read between the lines" example here although there was a huge valuation difference ( $250 M Davidson estate paid as estate tax initially and the $2.7 billion Estate tax IRS asked), Davidson Executors wasn't personally in trouble for valuation differences plus Davidson executors choose to pursue the tax firm to recover additional tax amounts paid.

I agree with you on this Ivy good point.

 

[ivy]

That would be an interesting turn of events! Would you happen to know the tax firm who completed the valuations?

I believe there were multiple firms doing the valuation. We learned about Eric Briggs's firm doing valuations for the catalogs during AEG trial. Probate accounting documents mentioned some assets were valued by court appointed valuation expert(s). Estate has a tax law firm handling the dispute - Hochman,Salkin,Rettig. In other words I'm sure that it's not like Estate Executors themselves personally determined the values of the assets and prepared their Estate tax return, most probably (and almost certainly) there were other third parties that prepared the valuation for final Estate tax filing.

As we both already mentioned and agreed, the most likely outcome that IRS and Estate would settle the dispute. If Estate believes there was a mistake by those third parties that caused the Estate to pay higher taxes, they can pursue those third parties to recover the extra taxes paid.

But Deloitte is one of the most respected accounting companies in the world. Makes me think of all the respected and reputed pros associated with MJ in all areas, and realize all over again, you just never never know where to turn or who you can genuinely count on when you need help.

I guess size of the Estate and type of the assets can make Estate tax planning and tax filing challenging. The more unique the asset is more harder to plan and value it. Similarly some assets are quite subjective in regards to valuation and valuation differences almost cannot be avoided. A few years ago I was looking to valuation for image and likeliness and there is at least 3-4 IRS approved valuation methods - all giving different values.

Michael's tax plan looks okay but failed due to the debts. If you read the trust document, you will see the goal was for Michael to transfer the ownership of his assets to "MJ Family Trust" when he was alive. The assets would be owned by "MJ Family Trust" and there wouldn't be an Estate tax on them as they weren't changing ownership after MJ's death. However due to the debts on the assets , the transfer to the "MJ Family Trust" never happened and that's why they are now need to be taxed for Estate tax purposes.

 

[#MJforever57]

Ivy if this would have happen would the Estate still have these taxes with the IRS?

Ivy i think i answer my own question your last part because there was debts on the assets you have the taxes so the Estate will have to pay right?