Back in 2014 I did a series of opinion pieces on the MJ Estate v. IRS Estate tax dispute. (Link here, here and here).Initially I planned to do more posts getting more technical about tax issues and valuation. However after seeing the confusion even about market value vs. tax value, I realized how complex and boring the tax discussion was for many people. So I scratched my idea of posting more opinion pieces.

From the start I believed that the true tax amount was in the middle of what MJ Estate and IRS were saying. A further look into other similar disputes confirmed this belief. So I did not see any real benefit in speculating and even arguing about what the final tax amount would be. Plus I thought the parties would come to a settlement rather quickly. Unfortunately I was wrong.

irsblog1  irsblog2 

 

By the time the trial finally started in February 2017, I was focused on other cases. I still felt the same way about IRS case – that I did not want to do technical complex (and even boring) posts and that the true amount was somewhere in the middle. I was optimistic that a major media source would report on the case regularly but that did not happen. While media occasionally reported intriguing testimony, they too did not seem to be interested in reporting the complex valuation issues.

However one thing from the opening statements stood out to me. It seemed like neither the media nor the majority of the fans were realizing that the tax deficiency had already been significantly reduced.

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June 23 Update: Trial has taken off calendar as parties notified the court that they are in settlement talks (parts or all of the disputes). Status report is due in September 2014. (see below)

June 16: MJ Estate v. IRS trial date is set as November, 17 2014. 

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Michael Jackson’s Estate Challenges IRS in Tax Dispute
By Andrew Zajac - Aug 20, 2013 8:28 PM


Michael Jackson’s estate challenged a tax bill calculated by the U.S. Internal Revenue Service, arguing that it overvalued assets including real estate, a Bentley automobile and the late singer’s “image and likeness.” 

The estate filed a petition in response to an IRS “notice of deficiency” issued in May regarding the estate’s tax return. All amounts in the document were redacted. 

The valuations in the estate’s return “were accurate and based upon qualified appraisals by qualified appraisers who had extensive experience in valuing entertainment industry assets,” according to the petition. It was filed July 26 in U.S. Tax Court in Washington by attorney John Branca and music executive John McClain, the co-executors of Jackson’s estate. 

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For reference

Valuations by Estate / IRS 

Hayvenhurst : $4,100,000 / $ 5,525,000 (Mortgage on Hayvenhurst: $ 4,071,931 to be subtracted)

MJJ Ventures : $13,739,304/ $81,133,084

Neverland : $0 / $ 1,755,722

1955 Rolls Royce : $26,300 / $0 

1957 Rolls Royce : $74,200 / $ 0

1990 Rolls Royce : $ 55,000 / $45,000

2001 Bentley : $ 91,600 / $250,000

J5 Master recording rights : $11,193,329 / $45,492,424

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