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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."

297 COMMENTS

No Avatar
91.

sue    

the family will certainly fight this. wow...

166 days ago
92.

BILL    

Looks like momma jackson willbe suing the IRS for MJ cause he is black

166 days ago
93.

Andy King    

how can a man have 1.1 billion and have to pay the government 700 mil? that's insane! Anyone who doesn't have a problem with the government taking that large of a chunk needs to have there heads examined. I don't care if hes rich, i don't care what he has done, none of that justifies BIG BROTHER taking that large of a chunk.

Remember when George Steinbrenner died? He died in the month of December. If he had died in the new year the new tax laws on estates would of required his sons to sell the New york Yankees to pay them. THE NEW YORK YANKEES! Would of had to be sold to satisfy the government.

They take way too much, they spend way too much, they lose way too much, they waste way too much.

The government has become your alcoholic brother in law who lives in your basement. He wont get a job, wont save any money, wont pay rent, and wants you to buy him the premium movie package for cable TV.

166 days ago
94.

slick12    

and yet, GMC, Apple, and all these billion dollar companies don't have to pay a cent in taxes. How about you go after them idiots????

166 days ago
95.

Sonja    

The loss of the money won't hurt the kids one bit.. there is still more than enough money for them all to live very comfortable lives.. that money has nothing good for the family at all.. if anything it's been a curse. Maybe if there wasn't billions to fight for these kids might actually have a chance at more normal adult life than MJ's family has proven to be.

166 days ago
96.

Toilethead    

What do you expect from that loony family? They're all a bunch of crooks. Throw them all in prison, including the old hag.

166 days ago
97.

mark    

The Jackson family is been lying and cheating for decades, I hope they loose everything!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

166 days ago
98.

leon    

And the family scatters like **** roaches lol

166 days ago
99.

Kelly    

I would imagine he was a lot closer to bankruptcy then $1B. Why would he begin a comeback tour in his 50's if he had plenty of money? He had serious health issues, severe pain and sleep deprivation. If he'd had anywhere near $1B his entertainment life would've been over and he would've moved on to philanthropy or other projects.

166 days ago
101.

cveti    

You are pathetic envious people. Jackson family can make money because they're all talented. They know how to make your name known. See Tribal Michael - all are talented, it's their genes. Why family should not have money? And you do something with your life. Get more from them, as Michael did for his family.

166 days ago
102.

Heidi    

TMZ, YOU'RE SOMETHING ELSE!!! NOW THAT BEIBER STORY IS DIEING DOWN & PEEPS AREN'T TALKING ABOUT MILEY ANYMORE FOR THEY'VE DISCOVERED THAT TWERKING WAS DONE BY TONS OF CELBS PRIOR TO HER... IT'S NOW TIME TO WRITE ARTICLES ABOUT THE DECEASED, M.J.. TO BE FACTUAL.... FURTHER IT'S 'ALL' 'ALLEGATIONS'..... IRS IS NOT FEEDING TMZ FACTS ON THIS SO STOP MISLEADING W/YOUR HEADLINES..... AGAIN, ALLEGATIONS!!!

166 days ago
103.

Mitty D    

The Jacksons are a bunch of low and no talent money grubbing whores,MJ was the meal ticket for most of the family.When he dies so did the money.Tried to sue the concert promoter to get money.Now grossly under valueing MJs estate.I hope they loose this too.

166 days ago
104.

gilcarlson    

Have you seen these great pictures of Michael Kackson? His estate, his kids, his death?
http://www.michael-jackson-photos.com/

166 days ago
105.

KA    

Hmm, while, on the one hand I do find the estate's estimate to be a bit on the low side, I also find the IRS' estimate to be a bit on the high side. So I'd like to know more about what each side was basing their estimates on. Remembering that as much as Michael is a major music icon, at the time of his passing, and for many years before this, he had a lot of negative press, resulting in his career being in a something of a slump which he was hoping to revive. Therefore, the value of his estate, at the time of his passing, would not have been too good.

My feeling is that with all the good work the estate has been putting in, the IRS is looking at the current value as opposed to the value at the time of MJ's passing, but I could be wrong.

166 days ago
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