Michael Jackson's Billion-Dollar Tax Battle Continues
The battle between the IRS and Michael Jackson's estate is heating up. While trial is not set to begin until 2017, the end result could make this a billion dollar case. The dispute centers around the value of Michael Jackson's likeness rights at the time of his death. The IRS claims that these rights were worth approximately $434 million, while the estate asserts that these were only worth about $2,100.
Most recently, the court has decided to exclude expert analysis on the valuation of Jackson's image. However, it has required certain key members of the legal team from Jackson's estate to be deposed, as well as one of Jackson's former business managers. Since this case has been pending since shortly after the pop star's death, nearly half a decade ago, the legal fees have become astronomical. It is estimated that by the time the case is through, if the IRS prevails, the estate will owe nearly $1 billion.
Why the $434M Discrepancy?
The large financial discrepancy between the estate's and the IRS's valuations is incredibly significant. When a person dies and passes their estate, or part of their estate, onto another person or entity, estate taxes are due to the IRS. Jackson's likeness rights are part of his estate. If the estate's valuation is held to be accurate, then taxes will only be due for the $2,100 value rather than on the $434 million asserted by IRS.
Jackson's estate is claiming that at the time of his death, his likeness rights were not worth very much money because he was suffering from an image and reputation problem. The estate claims that Jackson's image was ressurrected after his death, but at the time of death was worth very little because of all the public scandals Jackson faced.
Posthumous Likeness Rights
It is not uncommon to hear about lawsuits brought by the estates of dead celebrities over the likeness rights being used without authorization.
- Last year, Bob Marley was in the news because several companies had used his likeness without authorization.
- Before Mr. Marley, the estate of Marlin Brando had to sue Harley Davidson over their unauthorized Brando Boots.
A celebrity's image and likeness rights are actually a protectable asset that gets passed on in death to the heirs of the celebrity.
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