The Michael Jackson Estate is under fire from the IRS to the tune of more than $700 million. Legal documents claim his net worth at the time of his death at $1.125 billion, according to TMZ on Feb. 8.
But according to documents filed with the U.S. Tax Court in Washington, Jackson's executors placed his net worth at the time of his untimely death in June of 2009 at just over $7 million.
The nation's tax agency has reportedly told Jackson's executors that the estate owes $505 million in taxes, plus an additional $197 million in penalties, for a total of more than $702 million, as reported by The Los Angeles Times.
The alleged miscalculation, if valid, qualifies for a "gross valuation misstatement penalty." That apparently would allow the government to double the usual 20 percent penalty for underpayment to 40 percent.
"I've never even heard of the gross valuation misstatement penalty being asserted," said Andrew Katzenstein, an estate tax expert at the law firm Proskauer Rose in Los Angeles.
The difference between Michael Jackson's estate lawyers and the IRS is so vast it reads like a typo. Some of what the IRS claims Michael Jackson's estate under-reported are as follows:
- The estimated value of Jackson's interest in a trust that owns "The Beatles" song catalog, along with his own songs, to be "ZERO". The IRS values it at more like $469 million.
- MJ's likeness at $2,105. The IRS says the value is actually more in the neighborhood of $434 million.
- Another Michael Jackson trust was valued at $2.2 million by the estate, which the tax man says is really worth $60.6 million.
It is possible that in the worst case scenario, the taxes could basically wipe out what the estate has made since Jackson's death.
And yet, it's awful to think that what estate lawyers may have done in playing loose with the government could come back to wipe out Michael's legacy to his children.
What do you think?