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Michael Jackson Estate

The IRS is

Off the Wall!

2/10/2014 12:45 AM PST BY TMZ STAFF
EXCLUSIVE

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Michael Jackson was broke as a joke when he died ... so the IRS tax attack is showing a glaring ignorance ... so claim the people who run the MJ Estate.

Sources connected with the Estate tell TMZ ... they never suggested the Beatles catalog was worth ZERO -- to the contrary they agree it's worth around $1.5 BILLION.

That said ... sources say there's a reason they put a big fat zero in the Beatles column when they filed tax returns just after Michael died.  They say there  was a $700 million loan taken against the purchase of the catalog, bringing the net value to $800 million.  Michael and Sony were 50/50 partners ... which means Michael's share was around $400 million

Now the debt.  Michael leveraged his interest to the hilt -- he borrowed $320 million against the catalog.  And He owed another $200 million in personal debt ... And that's why they put ZERO.

One bone of contention -- although the Estate values the catalog at $1.5 billion, the IRS says it's DOUBLE that amount.

Estate sources say the IRS is also off base on the issue of MJ's likeness and image, which they valued at only $2,105 at the time he died.  The IRS says it's worth more like $434 million.

Our sources say you have to look back at June, 2009.  They say Michael made zilch on his likeness and image for the 15 YEARS before his death -- no commercials, not even T-shirts ... no one wanted to be associated with him -- at least commercially.

And finally ... as for the Jackson 5 music collection -- the Estate says it was worth $11.2 mil when Michael died ... the IRS says $45.5 mil.

So the sources say after settling up with Motown, MJ's interest was a lot less than people think.  The Estate would gladly sell Michael's rights even today for $45.5 mil ... they say they'd sell it for $30 mil!

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62 COMMENTS

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31.

Djslick3    

Michael Jackson died on the 25th of June and they're still on his name. Give the man a break plz, let him rest in peace

224 days ago
32.

marco balletta    

Do you know 1 of the reason why MJ Estate ‘s executors tax filing is bogus ?

Please read the article below about MJ’s Likeness and REMEMBER that executors are personally liable for IRS penalties and beneficiaries (MJ3/KJ) can file for damage against the Executors.

Valuation Issues - Likeness

The most common method to value a celebrity’s persona involves a combination of the Income Approach and the Market Approach. Under this methodology, the value of a celebrity’s persona is based on the present value of the potential stream of income that could be realized from this right. This is determined by projecting the expected future benefits from the ability to continue to exploit the celebrity’s persona, and discounting these benefits back to their present value at a rate of return that reflects the risk involved in realizing the benefits. These benefits may involve streams of income from both existing contracts, licensing, and sponsorship agreements, as well as anticipated agreements. The latter source of income is far more difficult to estimate as it is both potentially long lasting and subject to changing consumer preferences. Numerous assumptions will need to be made in attempting to project the future benefits, including the amount of income to be expected and the duration of the income. The amount of income will be influenced by the appropriate royalty or licensing rate, which will depend on both the celebrity’s popularity and the particular item involved (e.g., photographs, clothing, reproductions). In many cases, future royalty rates may be estimated based on rates achieved by the celebrity in past deals, or similar agreements achieved by other celebrities. By considering actual royalty rates or comparable rates in the determination of future rates, this latter analysis reflects the application of the Market Approach in the valuation.

Of even further difficulty may be estimating the post-mortem duration of income from the celebrity’s status. Although beyond the scope of this article, this may be accomplished through the use of a “lifing” or “survival” curve, which attempts to estimate the remaining useful economic life of an asset, or the amount of time the asset is expected to survive and continue producing income. To estimate remaining useful life, appraisers often study the lives of similar intangible assets by selecting a population of comparable assets and analyzing the turnover, or “decay,” of these assets over time. For instance, for licensing agreements involving a celebrity’s likeness, the appraiser may look at the pattern of royalty income over time. An illustration of this type of analysis is presented below.

In addition, as we have noted previously, the recognition, application, and protection of the right of publicity varies greatly from state to state. As such, the legal landscape must be considered in making assumptions and estimates for use in the valuation analysis. For instance, the appraiser must consider whether the rights in question are actually descendible in the individual’s state of residence and, if so, how long do they last post-mortem? Not all states recognize a post-mortem right of publicity, and for those that do recognize it, the number of years that post-death rights are recognized varies significantly. Indiana and Oklahoma, for instance, provide recognition of the right of publicity for 100 years following the death of an individual, while Tennessee limits the right to just 10 years. Kentucky, Nevada, and Texas all recognize the right for 50 years post-death, and California for 70 years. New York does not currently recognize a post-mortem right of publicity, although there is legislation pending in the state that would grant such a right.

Finally, it may also be necessary to consider that death may actually cause a surge in an entertainer’s popularity and the associated income from the licensing of their image or likeness. This phenomenon was most clearly illustrated with the estate of Michael Jackson, who received an intense amount of interest (and a large surge in income) following his death.

Summary

A celebrity’s persona and likeness may produce considerable income for the individual both during life and after death. As such, the right to commercially exploit this image can be an extremely valuable asset. In the relatively recent past, it was common practice to ignore this right in determining the value of a decedent’s estate for federal estate tax reporting purposes. However, in the wake of the Andrews decision, estate practitioners must consider the value of this asset, and do what they can to protect the estate from the potentially unwelcome cir***stance of needing to use liquid assets to pay taxes on the value of illiquid property or, worse, having to sell or license the property against their will in order to generate cash to satisfy the taxes. Whether it be through the gifting of the right of publicity to beneficiaries before death, or determination of the value of this asset upon death, estate practitioners should consider a well do***ented and supportable valuation of this right as a critical component of the pre-death estate planning strategy and the post-death federal estate tax reporting requirements of a celebrity client.

http://b-marco.tumblr.com/post/76282985762/mjfam-do-you-know-1-of-the-reason-why-mj-estate

223 days ago
33.

Pure Evil    

Someone is trying to scam the kids out of their inheritance by selling it cheap. I hope those kids have someone looking out for their interests.

223 days ago
34.

Jesus    

This is a stupid article. He was not broke. He was never broke. He lived like a billionaire up until his death.

221 days ago
35.

phia    

Isn't it true that nobody escapes the IRS?
If Michael owed so much how come he still had assets at the time of his death(murder as proved)?

220 days ago
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