Michael Jackson Estate's $700 Million Tax Court Thriller Turns On Value Of Star's Name At Time Of Death

Wall Street Journal, Michael Jackson’s Estate Faces Demand for Big Tax Payment: Dispute With IRS Centers on Valuation of the Singer’s Name and Likeness Rights at Time of His Death:

When pop star Michael Jackson died in 2009, weeks before a planned comeback tour, how much was the man in the mirror worth? The answer is far from black and white.

After coming to agreements on the value of some of the King of Pop’s more concrete assets in a legal fight that began four years ago, the estate’s executors are facing off with the Internal Revenue Service in U.S. Tax Court on Monday, primarily over the valuation of the singer’s name and likeness rights at the time of his death.

Depending on the outcome of the case, the estate could be on the hook for more than $500 million in taxes and $200 million in penalties, according to the IRS’s notice to the estate of its deficiency.

The estate said it considered his name and likeness essentially worthless, valuing it at $2,105, as Mr. Jackson’s reputation was then tainted by child-abuse allegations and his strange public behavior. ...

But the IRS argues that the pop star’s name and likeness should have been valued at $161 million; that would be down from 2013, when it valued those rights at $434 million. ...

Los Angeles entertainment attorney Mitra Ahouraian said that if the IRS prevails, it is likely to pursue other celebrity estates for additional taxes on their name and likeness rights.

• Accounting Today, Tax Court Hears IRS Dispute Over Value of Michael Jackson Estate
• Billboard, Michael Jackson's Ex-Manager Takes the Stand in Tax Trial
• Bloomberg, Michael Jackson Is Worth More Than Ever, and the IRS Wants Its Cut
• Fortune, Michael Jackson’s Estate Could Face $700 Million in Tax and Penalty Payments
• Hollywood Reporter, John Branca Takes the Stand in Michael Jackson Tax Trial
• Hollywood Reporter, Michael Jackson Tax Judge Allows Trial Testimony About Intellectual Property Mashups
• Inquisitr, Michael Jackson's $1 Billion IRS Tax Trial Uses Grammy as Evidence
• Journal of Musical Things, The IRS Just Sent Michael Jackson’s Estate a Bill for $700,000,000
• Law 360, Michael Jackson’s Image Was In ‘Nuclear Winter’: Expert
• New York Daily News, Michael Jackson Was on Verge of Bankruptcy Before Death, Banker Testifies in Court 
• The Sun, Jacko's Financial Crisis: Michael Jackson’s Estate in £800 Million Tax Battle Due to Star’s Uncontrollable Spending Habit

Previous TaxProf Blog coverage:

• Settling Michael Jackson's Estate May Be a Thriller for the Lawyers (June 26, 2009)
• Michael Jackson's Looming "Estate Tax Disaster" (June 29, 2009)
• Michael as Elvis: Post-Death Exploitation of Jackson's Name Will Create "Money-Making Machine" to Pay Off Hefty Estate Tax Bill (July 7, 2009)
• Celebrity, Death, and Taxes: Michael Jackson's Estate (Oct. 21, 2009)
• What Is Michael Jackson's Name Worth? Estate Says $2,105, IRS Says $434,000,000 (Nov. 12, 2013)
• What Is the Value of Michael Jackson's Estate? Executor Says $7.2 Million; IRS Says $1.25 Billion (Feb. 10, 2014)
• Michael Jackson's $1 Billion Tax Court Thriller: IRS Values His Name At $434,000,000, Estate Says $2,105 (Apr. 26, 2016)