June 7, 2021 12:03 am

What is the Value of Michael Jackson’s Estate?

That was the issue before the Tax Court. The estate initially reported the value of his image and likeness at $2,105 on the estate tax return. At trial, the estate’s expert said it was $3.1 million. The IRS contended it was $161.3 million. Each side had experts argue about the potential future revenue stream from Jackson’s image and likeness.

The Tax Court, in a decision running more than 250 pages, decided that the value of Michael Jackson’s image and likeness for estate tax purposes was $4.2 million (Estate of Michael J. Jackson, TC Memo 2021-48). The court called the IRS’s valuation a “fantasy.” What’s more, the court determined that the value of his interest in a music publishing business with Sony, which held a Beatles music catalog, was zero, although the value of his interest in the music catalog of his and other artists’ works was $107 million.

Interesting note: The estate was represented by a firm in which IRS Commissioner Rettig was a member, although he withdrew from the case when he was awaiting Senate confirmation as commissioner.

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Tax Glossary

Capital gain distribution

A mutual-fund distribution allocated to gains realized on the sale of fund portfolio assets. You report the distribution as long-term capital gain even if you held the fund shares short term.

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