Jackson Family

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."

A California appeals court just formally and forever shut down Conrad Murray's contention ... Michael Jackson killed himself by self-injecting that fatal dose of Propofol.

Murray had appealed his manslaughter conviction with a kitchen sink of arguments, including MJ accidentally offing himself. The California Court of Appeal has ruled ... Murray's theories are just that -- theories. The court went on to say the evidence was plentiful ... that he did the deed.

The judges noted incredulously ... Murray's fingerprints were all over the Propofol bottle and they said he acted like a guilty man when cops showed up ... by lying to them. They also zeroed in on Murray cleaning up the scene after the fact.

Even though Murray has served his sentence ... the appeal was important. If he won he could have made a credible pitch to regain his medical license.

Lloyd's of London has dropped its claim that it doesn't have to honor a huge insurance policy on grounds it was never told Michael Jackson was a drug addict ... and we've learned Lloyd's has now agreed to a payout.

Lloyd's filed a lawsuit claiming it did NOT have to honor the policy it issued to cover losses from the failed "This Is It" tour. Lloyd's felt it had been deceived because no one ever disclosed Michael had serious drug problems.

The case just settled and we know ... Lloyd's has paid something to settle. We're told it's not the full $17.5 mil under the policy. We do not know the amount ... just that it forked over money.

The reason a payout is so important -- Lloyd's essentially folded on its fraud claim.

Katherine Jackson just got shut down by an L.A. judge ... who REJECTED her bid for a new trial in the Michael Jackson wrongful death case.

A jury shut Katherine down in October ... ruling AEG Live did not screw up in hiring Dr. Conrad Murray.

Katherine claimed jurors had been given confusing instructions ... but the judge wasn't buying what she was selling.

Katherine's recourse now is to take up her beef with the California Court of Appeal. She's already filed legal docs with the court.

Katherine Jackson has pulled the plug on her campaign to solicit money from Michael Jackson fans to pay for an MJ documentary ...TMZ has learned. The question -- Where did the money go?

TMZ broke the story last week ... Katherine -- along with Paris, Blanket and Prince -- made an online plea to Michael's fans to contribute money so she could license songs and images from the MJ Estate for a documentary she wanted to make.

We made it clear in our story ... the whole thing reeked of a scam, because the Estate was never contacted about licensing anything for Katherine's documentary and based on what we know ... there's no chance in the world the Estate would sign off on the project for any amount of money.

And here's what's really suspicious ... The website Katherine used allows her to keep the funds if the project is never made ... money contributed by MJ fans.

So almost immediately after we posted our story ... Katherine and/or her people pulled the plug on the project.

A source close to Katherine tells TMZ ... he's been told every cent of the money raised was refunded and Katherine got nothing ... but we can't confirm it.

Katherine's lawyer, Perry Sanders, tells TMZ Katherine wants to do a documentary and she "fully anticipates the executors will see the artistic honesty of this project and help make [it] successful." She shouldn't hold her breath.

Here's the deal ... Katherine Jackson is fundamentally a good woman with good intentions, but it's apparent she is often manipulated by people with bad intentions and that's what happened here.

Paris Jackson looked healthy and happy vacationing with her mom in Hawaii ... but MJ's daughter still has a long road ahead of her -- we're told the treatment will last years.

Debbie Rowe and Paris mugged for the camera during the trip ... as you know, Rowe lost contact with Paris after she divorced Michael Jackson, but the 2 reconnected a little over a year ago and are now extremely tight. Rowe speaks constantly with Paris -- who is at a boarding school in Utah.

As for Paris' treatment ... our sources say she's riddled with so many problems she's almost certainly spending several years at the facility ... where she is getting intensive counseling.

Katherine Jackson is not only WASTING HER TIME by appealing the AEG wrongful death case ... she's also making a mockery of the legal system ... so says AEG.

AEG just responded to Katherine's request for a new trial -- after Katherine argued that jurors were bamboozled because the jury instructions blocked them from being able hold AEG responsible for Conrad Murray's actions AFTER he was hired to take care of Michael Jackson.

Katherine had claimed that even if Murray was competent when AEG hired him, they should still be liable because he proved reckless and irresponsible during the months leading up to Jackson's death, and AEG did nothing to stop it.

But AEG claims Katherine is simply grasping at straws ... and her appeal is a pathetic last ditch effort from a desperate woman.

The entertainment giant also argues that the jury instructions were crystal clear and perfectly fair, taken directly from the California Civil Jury instruction guide book ... so too bad, so sad ... but that's the way the law works.

TJ Jackson -- the guardian of Michael Jackson's 3 kids -- is not in the XMAS spirit when it comes to a cousin who is trying to yank guardianship away from him ... we've learned TJ has gone to court asking a judge to blow this dude out of the water.

Anthony Jackson II filed legal docs asking a judge to appoint him guardian, but TJ says he never explains why. The petition sounds like BS, but what's interesting is TJ revealing a little bit about his role. He says both he and Katherine are doing a great job as co-guardians.

TJ says Paris, Blanket and Prince all like the way it is.

Katherine Jackson is irate that AEG is asking her to pay more than $1.2 million in costs associated with the Michael Jackson wrongful death trial ... claiming many of the so-called "expenses" are bogus.

AEG -- which won the case -- is asking the judge to sock Katherine with court costs. But according to new docs, obtained by TMZ, Katherine is blanching at a bunch of them, including:

-- $540,000 in models and blow-up court exhibits
-- $20,000 for 1,000 pages of jury instruction paper and other stuff
-- $53,000 for process servers
-- $118,000 unnecessary depositions

Katherine is even grousing about the $9 parking fees tacked on for court reporters to show up for the trial.

Michael Jackson's mom SAYS she's doing a heartfelt documentary about her son's life ... but the reality is ... it seems to be a shameful money grab.

Katherine Jackson has announced she wants to do the documentary, but needs the fans to send her money to pay for the licensing of Michael's image and music. Translation -- she's insinuating the big bad Michael Jackson Estate is being coldhearted and greedy by charging Michael's family.

Here's the reality ... Howard Weitzman, the lawyer for the Estate, tells TMZ NO ONE from the Jackson family has contacted him or anyone else from the Estate asking for permission to use MJ's image and music. Weitzman wants to make it clear ... "The Estate would never ask Michael's fans to contribute their money to finance any speculative project."

Katherine is using a website to solicit donations and is offering MJ merchandise as bait. FYI, the license for merchandising is held by Bravado, so Katherine can't do that without permission.

If Katherine makes the documentary, the people it will likely hurt are Michael's kids. That's because THEY are the ultimate beneficiaries of the Estate, and if the Estate does an MJ documentary in the future (which is almost certain), it will probably be devalued by anything Katherine does.

And it still gets worse ... Katherine and company have enlisted the help of Blanket, Paris and Prince to solicit funds from fans. It's pretty clear -- they don't understand the implications of helping her out.

So the bottom line -- if the Estate doesn't give permission to use MJ's music and image, the documentary won't get made. So what happens to the money the fans contribute? Well Katherine is using a website to solicit donations that allows her to keep all funds even if the project isn't made. So guess who ends up with the loot?

La Toya Jackson could not be clearer -- she's still a single lady, despite reports to the contrary.

Stories surfaced earlier this month ... proclaiming she got hitched to longtime BFF/business partner Jeffre Phillips.

Both La Toya and Jeffre made it clear as they left Katsuya in Hollywood ... they did NOT tie the knot. It looks like they're going the route of Kurt Russell and Goldie Hawn -- sometimes that works better.

Katherine Jackson has just formally asked for a new trial in the Michael Jackson wrongful death case, claiming the judge screwed up by not letting the jury consider that Conrad Murray acted like a nincompoop AFTER he was hired by AEG.

Katherine lost because the jury decided when AEG hired Murray, there was no reason to believe he was incompetent. The answer to that question ended the case. Katherine feels the judge should have allowed jurors to go further -- even if Murray seemed competent at the beginning, he proved reckless and irresponsible during the months leading up to Jackson's death, and AEG did nothing to stop it.

The documents formally asking for a new trial include statements from 4 jurors, who say they feel the verdict was wrong.

One juror says, "I feel so cheated ..." Another juror felt Katherine should have won, and complained the jury instructions made that impossible. And still another juror said, "This was a very unfair and upsetting way to end the case. There was no question in my mind that AEG Live was liable."

Katherine Jackson wants a do-over in her fight against AEG -- TMZ has learned, she just filed docs asking for a new trial ... after the jury ruled in favor of the concert promoters back in October.

As we reported, AEG emerged victorious after Katherine sued the company for wrongful death, claiming AEG negligently hired Dr. Conrad Murray to care for Michael Jackson before his "This Is It" concert tour ... the same doctor who was ultimately convicted of killing the singer with a fatal dose of Propofol.

Katherine has now filed legal docs looking for a second chance to convince a jury AEG is to blame for MJ's death ... claiming she didn't get a fair shot the first time around.

Katherine lists a bunch of reasons for her claim in the docs ... including jury misconduct, new evidence, and general procedural errors.

A judge has yet to rule on Katherine's request ... but she's definitely facing an uphill battle.

Conrad Murray is pointing the finger back at Michael Jackson's Estate -- after it threatened to sue over stories he told about holding MJ's penis -- claiming the Estate was the first to open the can of worms that is MJ's medical secrets.

As we reported, the MJ Estate is threatening to sue Murray for blabbing to the media about the singer's sordid medical details -- including a story about holding Michael's penis every night. The Estate is claiming Murray has been violating the doctor-patient privilege by running his mouth in public.

But sources close to Murray tell us, he's not scared ... because he believes once Katherine sued for wrongful death (and exposed a bunch of MJ's medical secrets at the trial) she compromised the doctor-patient privilege on her son's behalf.

The Michael Jackson Estate has had just about enough of Dr. Conrad Murray running his mouth -- talking about things like how he used to hold MJ's penis every night -- and now it's demanding he shut up once and for all ... or face a lawsuit.

MJ Estate lawyer Howard Weitzman fired off a cease and desist letter to Murray earlier this week, writing, "Your recent comments to the media about Mr. Jackson’s medical treatment and ultimate death shamefully violate the physician-patient privilege under California law."

He calls Murray a COWARD for attempting to use the media to defend himself ... instead of testifying in court during his manslaughter trial.

If Murray keeps talking, Weitzman says the Estate will file suit -- and will subsequently inform any medical board with which Murray attempts to obtain his medical license that he violates the doctor-patient privilege willy-nilly.

Paris Jackson is doing better as she remains ensconced in a Utah boarding school ... but we're told she's riddled with so many problems she could be there "for years."

We've learned Paris had a family therapy session this morning with Debbie Rowe and Katherine Jackson. We're told Debbie and Katherine were on the phone, while Paris was with her therapist at the facility.

Sources say Paris may get a pass to come home for a few days in January, and Katherine is redoing Paris' room for the homecoming.

But the homecoming will be short-lived. Our sources say the boarding school will be home for a long time, very possibly "years."