Michael Jackson. Photo courtesy of Youtube.
Summary: The IRS wants millions from Michael Jackson’s Estate; and if they collect, his kids may wind up without their inheritance.
Michael Jackson’s kids could lose their reported $900 million inheritance, and The King of Pop’s huge tax bill is to blame. Express reports that Jackson’s children, Prince, 19, Paris, 17, and Blanket, 14, are rumored to receive their money once they hit the ages of 30 to 40, but that money could all go to the government instead.
Prince, Paris, and Blanket Jackson. Photo courtesy of Youtube.
Jackson died in 2009 at the age of 50, leaving his family to mourn and deal with his debts. Forbes reported in 2014 that the IRS upped its demands from $702 million in back taxes to $731 million. The IRS calculated that Jackson owed money on his likeness and his master recordings which include his own songs and songs he bought from the Beatles. In addition to back taxes, the Estate may also be subject to fines.
One of the most notable discrepancies between reported income and what the IRS values is the evaluation of Jackson’s likeness. The Estate valued his name and likeness at $2,105. The IRS contends it’s worth $434 million.
Attorney Gary S. Wolfe specializes in IRS tax audits. He said what’s happening here is “bad math.” He finds it “incredible” that the entertainer, whose estate earns $160 million a year, would claim his likeness was only worth $2,105. However, he says they have a chance of beating the IRS only “if the Estate tax return is based on the law and facts support it.”
Forbes referred to the Estate’s evaluation of Jackson’s image of $2,105 as “trifling,”but they also noted that, “It’s the value of his image at death that matters for estate taxes.” While the public has seen a resurgence of Jackson’s music because of Cirque du Soleil’s shows based on his work, an endorsement deal with Pepsi, and a concert film; at the time of his death, Jackson was plagued with allegations of child molestation which tarnished his brand.
Overall, Forbes predicts the outcome of this case could affect other celebrity estate tax cases in the future.