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Michael Jackson Estate

Targeted by IRS

Shocking Tax-Cheating Allegations

2/8/2014 9:08 AM PST BY TMZ STAFF
breaking news

0207-michael-jackson-irs

The Michael Jackson Estate is in the crosshairs of the IRS for allegedly cheating taxpayers out of a fortune ... and now the taxman wants the Estate to pay the piper -- to the tune of more than $700 million.

The allegations are stunning.  According to legal docs -- obtained by the L.A. Times -- when Michael died the executors told the IRS his net worth was around $7 million.  The IRS now says MJ's net worth was actually $1.125 BILLION

And in a HIGHLY unusual move, the IRS claimed executors so grossly misled the agency, it doubled the tax penalty -- from 20 - 40%.  So the IRS claims the Estate didn't pay $505 million worth of taxes, and when you add the 40% it comes to more than $702 Million.

As for what the agency says was under-reported:

-- The Estate valued MJ's likeness at $2,105. The IRS says the value is actually more than $434 million.
-- The Estate valued Michael's interest in a trust that owns songs by MJ and the Beatles at ZERO!  The IRS says its more like $469 million.
-- There's another MJ trust the Estate claims is worth $2.2 mil.  The IRS says it's worth $60.6 mil.
-- The Estate valued the Jackson 5 master recordings at $11.2 mil.  The IRS says $45.5 mil.

It's pretty clear the Estate will fight this like crazy, but worst case scenario the taxes could wipe out what the Estate has made since MJ's death ... which could be devastating for Michael's kids.

We contacted a rep for the Estate who says they stand by their initial statements on the matter ... telling us, "The Estate of Michael Jackson disputes the IRS position in its entirety."

The rep adds, "The Estate used independent, nationally-recognized and highly-qualified expert appraisers in determining the value of the Estate’s assets. By contrast, the IRS consultant’s values are not based on standard appraisal methodology, but rather are speculative and erroneous assumptions unsupported by the facts or law. The Estate has paid over $100 Million dollars in taxes and is in full compliance with the tax laws."

301 COMMENTS

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1.

Inconceivable!    

Is anyone shocked?! I hope they pay and pay the massive penalty too. No one is above paying taxes.

68 days ago
2.

LA Pho Life    

That makes me weep gently on my pillow.

68 days ago
3.

OhWell    

?? Michael Who ??

68 days ago
4.

OhWell    

?? Michael Who ??

68 days ago
5.

t.r.    

Look Jackson family, if *I* gotta pay my taxes, *you* gotta pay your taxes. $2,500 for MJ's image? Are you serious? Zero for the songs catalog? Gimmee a break. The IRS is going to have a field day with this.

68 days ago
6.

sara    

Is not he the same Michael Jackson everyone was trying very hard to proof was bankrupt when he died and riddled with debt ? You can't have it both ways, can you?

68 days ago
7.

(ಠ_ಠ) Jacko The Pretty Little Shemale ( . ) ( . )    

Hey Look,


It's Bruce Jenner!

68 days ago
8.

porkchop    

Exactly WHO IS the ESTATE?

68 days ago
9.

Luz    

In other words, the Estate is still bankrupt. The ZiRS never admits they are wrong!

68 days ago
10.

Nikki    

#DeadPeoplesProblems

68 days ago
11.

Kelly     

They'll just have to negotiate it down. Obviously the evaluations are too low and high.

68 days ago
12.

The Truth    

Picking out just one item the owns songs by MJ and the Beatles were used as collateral to get a loan from Sony Records for $200 million which has not been paid back.

So the IRS cannot say the value is $469 million as the royalties from the use have not paid off the interest alone on the $200 million.

Sounds like a witch hunt by the IRS.

Then Truth Hurts

68 days ago
13.

BLUE UGLY 💩    

Get Tito to straighten it out

68 days ago
14.

Quiet    

this be the best thing for everyone involved. If it gets wiped out to zero then katherine wont feel so bad losing and fighting the fortune that is not there. I hope it gets wiped out and paid off . once its paid off and his estate is at zero, his estate will start to grow again in sales in the next few years so his kids will have some monies from estate when they turn 18. those kids do not need that kind of money at 18 . they deserve money but not like whitney houstons daughter getting no education and smashing up cars., getting married at 18 etc. just cus she inherited alot of money.

68 days ago
15.

lesbian rock    

Never an MJ fan, but I will say I suspect the people running the estate these days, probably are taking more than a little here & there and stashing it away for themselves.

68 days ago
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