Robert J. Fedor, Esq., L.L.C.

IRS claims Jackson estate owes more than $7M in back taxes

It's difficult to dispute the commercial success enjoyed by the late Michael Jackson. It's also difficult, however, to dispute that the late singer had his share or personal, legal and financial problems which seemed to often overshadow his larger-than-life career.

Since his passing in 2009, much has been written about Jackson and his excessive and often odd spending habits. From his sprawling Neverland estate to his numerous medical procedures, Jackson's debts reportedly surpassed more than $500 million dollars at the time of his death.

Jackson's estate paid off the remaining portion of his debt in 2012 and matters related to the late singer's debts were believed to be settled. The Internal Revenue Service, however, recently announced that the Jackson estate owes an estimated $505.1 million dollars in back taxes in addition to $196.9 million more in penalties.

The back taxes stem from action taken by Jackson's estate when filing taxes for the 2009 tax year. Upon doing so, estate administrators estimated the total value of Jackson's estate to be worth $7 million dollars. The IRS, however, estimates that the estate was worth significantly more. For example, Jackson's "image and likeness" alone was severely underestimated as being worth only $2,105. The IRS placed a much higher value on the late singer's likeness estimating a $434 million dollar worth.

The IRS case related to the alleged back taxes and penalties will be decided in court. While it appears as though estate administrators may have undervalued Jackson's estate, it's possible such mistakes stemmed from issues related to complex financial matters and the the massive amounts of debt he owed upon his death.

Source: Music Times, "Michael Jackson Lawsuit: IRS Claims King of Pop Owes More Than $700 Million in Taxes adn Penalties," Aug. 26, 2013

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