Update: A New Way to Tax the Michael Jackson Estate?
by Terri Eyden on
By Teresa Ambord
More than four years after Michael Jackson's death, the tug of war between his estate and the IRS seems to be heating up rather than nearing agreement. Some estate specialists wonder if the IRS is looking to tax assets they haven't generally taxed before.
The key issue is Jackson's image and likeness. Not only do the IRS and attorneys for the estate disagree, they aren't even in the same universe. Jackson's estate says his image and likeness are valued at $2,105. The IRS bumped the value up just a bit . . . to $430 million.
As a result of the difference in valuation, the IRS is seeking more than $700 million in tax penalties, according to Bloomberg BNA.
Attorney Matt Kadish of Kadish, Hinkel & Weibel in Cleveland told Bloomberg reporters this is a departure from usual IRS practice. He said he was "unaware of any cases to date that have addressed whether the value of a person's image rights are subject to estate tax, and if so, how to value them."
There are cases, said Kadish, that have addressed the value of a celebrity's image and likeness for income tax purposes, but not estate tax. "Those cases focused on allocations of income, and apart from some dicta, didn't directly rule on whether image rights are a separate asset for tax purposes."
Adam Streisand, the head of Loeb & Loeb LLP's trusts and litigation department in Los Angeles, told Bloomberg an estate is entitled to value property based on what's known at the time of death. The IRS, on the other hand, is valuing Jackson's image and likeness based on subsequent events.
Kadish said this is a new tax liability that's causing him to wonder, "Are athletes, entertainers, and other celebrities going to have to buy life insurance, or engage in other new planning, to avoid a ruinous 'cash crunch' shortly after their death?"
Stay tuned to see where the tug of war goes next.
Wait, there's more!
There's always more at AccountingWEB. We're an active community of financial professionals and journalists who strive to bring you valuable content every day. If you'd like, let us know your interests and we'll send you a few articles every week either in taxation, practice excellence, or just our most popular stories from that week. It's free to sign up and to be a part of our community.
Premium content is currently locked
2 weeks 1 day ago by mucar1990