Damn! The IRS Wants $702 Million In Taxes From Michael Jackson's Estate

The spectacle that was Michael Jackson's life shows no signs of abating with his death.
There was the conviction of the doctor who gave him the fatal overdose of a powerful anesthetic, battles over his will, attempts to remove the executors of his estate and the wrongful death suit against the promoter of his doomed comeback tour.
Now, Jackson's estate is in the midst of a fight with the Internal Revenue Service.

The agency has told Jackson's executors that the estate owes $505 million in taxes and an additional $197 million in penalties, for a total of more than $702 million.
According to documents filed with the U.S. Tax Court in Washington, Jackson's executors placed his net worth at the time of his June 2009 death at slightly more than $7 million.
The IRS placed it at $1.125 billion, a difference so vast it looks like a typo.
Jackson's return was so inaccurate, the IRS said, that it qualified for a gross valuation misstatement penalty, which would allow the government to double the usual 20% penalty for underpayment.
"I've never even heard of the gross valuation misstatement penalty being asserted," said Andrew Katzenstein, an estate tax expert at the law firm Proskauer Rose in Los Angeles.
Few estates are valuable enough that they are required to file with the IRS. In 2012, the latest year for which statistics are available, only 9,400 estate-tax returns were filed in the nation. Because the value of the estates that file is relatively high, they usually are audited, tax experts said, but few end up in Tax Court.
"Estate planning is like playing a game of hot potato, and the potato is wealth, and you don't want to die with the potato in your hands," said Edward McCaffery, a professor in USC's Gould School of Law. "You want to get it out to your kids or into trusts."

Most of the dispute is over the value of Jackson's image, along with his interest in a trust that includes the rights to some of his songs and most of the Beatles catalog, including "Yesterday," "Sgt. Pepper's Lonely Hearts Club Band" and "Get Back."
The estate valued Jackson's likeness at just $2,105.
The IRS put it at $434.264 million.
A dead celebrity's image and likeness, used on things such as T-shirts and television commercials, can be a lucrative source of income. Elizabeth Taylor, for example, directed that 25% of the income from her image go to the Elizabeth Taylor AIDS Foundation.
The estate put the value of the pop star's interest in the trust that owns the Beatles' and Jackson's songs at zero. The IRS put it at $469 million.
A certified public accountant testified during the wrongful death suit last year that Jackson had taken a $320-million loan against the music catalog.
The IRS also said Jackson's interest in another trust was worth $60.6 million, not $2.2 million, as the estate claimed.
Experts agreed that it was hard to imagine that someone would price a catalog that included some of the world's most memorable songs at zero and think it would pass muster with the IRS.

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