Sunday, May 9, 2021

Michael Jackson is the winner in the estate tax judge’s ruling

After michael jackson Died in 2009At the age of 50, the executors of his estate began flickering financing of the on-line King of Pop, settling debts and making new entertainment and business deals. Before long the assets were in strong shape, with debt reduced and millions of dollars in earnings.

But there was another case that has been in litigation for more than seven years: Jackson’s tax bill with the Internal Revenue Service, in which the government and property held vastly different views as to what Jackson’s name and likeness were worth When he died.

The IRS thought they were worth $ 161 million. The estate put it at $ 2,105 – arguing that Jackson’s reputation was at the end of his lifetime, after lurid reporting on his eccentric lifestyle and a widely covered trial on child molestation charges, in which Jackson was acquitted. It was done.

In a closely watched case on Monday, which may have implications for other celebrity estates, United States Tax Court Judge Mark V. Holmes ruled that Jackson’s name and likeness were $ 4.2 million, rejecting several arguments from the IRS. This decision would significantly reduce the tax burden of property from the government’s earlier assessment.

The IRS believed it owed its tax liability on the property under $ 500 million and could pay an additional $ 200 million in penalties.

At the peak of his career, Jackson was one of the most famous people on earth, releasing some of the most popular records. And since his death, he has been one of the top-grossing celebrities in the world; Last year, Forbes speculated, earned his wealth $ 48 million.

But the tax case changed at the time of his death to the value of Jackson’s public image. His reputation was severely damaged, and since 1993, as Judge Holmes noted, Jackson had no endorsements or business deals related to musical tours or albums.

Yet the judge found that the $ 2,105 property was undervalued and that the property was “appraising the image and likeness of one of the world’s most famous celebrities – the Pop of the King – at a whopping price of 20” – Year old Honda Civic ”(complete with a footnote quote for a used car price guide).

In a 271-page judgment containing literary references to Hemingway and Plutarch, Judge Holmes – Who is Noted Summing up the condensed matters for his clear and sometimes witty writing style – expressing Jackson’s life, public reputation and behavior of finances.

The judge wrote, “We have not made any specific judgment as to what Jackson has done or alleged, but we must decide that what he did and what he did affects the value of what he did.”

Judge Holmes also valued two other assets: Jackson’s shares of Sony / ATV Music Publishing, the company that controlled millions of song copyrights – including most of the Beatles’ catalog – and Mizack Music, another catalog that Jackson’s own songs were kept. As well as what Jackson had achieved.

The estate had argued that those assets, with Jackson’s name and likeness, totaled $ 5.3 million. Judge Holmes decided that his total value was $ 111.5 million. (In 2016, Sony / ATV – now known as Sony Music Publishing – agreed to pay the Jackson estate $ 750 million To buy their share of that catalog.)

The Jackson case can be seen as a story of how celebrity estates can be valued, and for their tax liabilities. The IRS is still among the major estates before Prince and Aretha Franklin with major tax issues.

In a statement, Jackson Estate co-execs John Branca and John McClain called the decision “a huge, spectacular victory for Michael Jackson’s children”.

“For nearly 12 years Michael’s estate has maintained that the government valuation of Michael’s property on the day he died was outrageous and unfair, grieving his heirs with a repressive tax liability of more than $ 700 million.” Will, ”Branca and McClain said. “While we disagree with some parts of the decision, we believe it clearly exposes how unfair the IRS assessment was and ultimately provides a way to resolve the matter in a fair and just manner.” . “

The IRS did not immediately respond to a request for comment Monday night.

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