Paul L. Caron
Dean


Monday, July 13, 2009

Michael Jackson's Estate May Owe $80m to IRS

Michael JacksonAssociated Press:  Death and Taxes: Big IRS Bill Looms for MJ Estate, by Stevenson Jacobs:

Creditors and heirs of Michael Jackson hoping for a cut of his musical empire will have to line up with the Internal Revenue Service, which could lay claim to $80 million or more in federal estate taxes.

To settle his tax bill, the executors of his estate may have to sell or borrow against lucrative but hard-to-value assets or ask the IRS for a multi-year extension. That could allow the estate to pay the tab over time with earnings from Jackson's share in rights to songs by the Beatles and his own music — prized properties whose value will likely make the estate's tax bill only bigger.

"The government is not going to take a Beatles record as payment. They want to be paid in cash," said Roy Kozupsky, a veteran estate lawyer in New York who has worked on behalf of several wealthy clients. ...

According to documents obtained by The Associated Press, he claimed $567.6 million in assets as of March 31, 2007, including Neverland and his share of the Sony/ATV Music Publishing catalog, which holds the rights to songs by the Beatles, Bob Dylan and other artists. The documents also show that Jackson had $331 million in debt. That would leave him with a net worth about $236 million at the time. Based on that number, Jackson's federal estate tax bill could exceed $83 million after exemptions. California, where Jackson lived at the time of his death, has no estate tax, but some states do. ...

The estate's tax dilemma highlights the cost and complexity of dying wealthy in America. Ironically, had Jackson died six months later, his estate may have had to pay no estate tax at all. Under current law, the estate tax is set to be lifted for one year starting Jan. 1, 2010. However, most experts expect Congress to overturn the one-year suspension before the end of 2009, meaning the estate tax would remain in place.

https://taxprof.typepad.com/taxprof_blog/2009/07/michael-jackson-estate.html

Celebrity Tax Lore, Tax | Permalink

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Comments

I hear the family is bringing in some big-name tax consultants...

Posted by: Jack Bogdanski | Jul 13, 2009 3:05:22 AM

The idea to pay takes off the earnings from Jackson's share in rights to songs by the Beatles and his own music is actually not bad! I think it is the one truly certain source of income. The estate will lose value over time (which it did and keeps doing in the present), but the music... oh, the music!

Posted by: Giulia Relation | Jul 13, 2009 6:12:18 AM