Michael Jackson's estate is in big trouble with the Internal Revenue Service. When Jackson passed away in 2009, he was estimated to be worth $7 million. Since that time his net worth has ballooned to $1.125 billion.
The IRS alleges that MJ's estate have filed outrageously inaccurate tax returns. The agency claims it is owed $505 million in taxes. In addition, a 40% gross valuation misstatement penalty has been added to bring the total amount owed to over $702 million.
Estate tax expert, Andrew Katzenstein, of the law firm Proskauer Rose in Los Angeles, told the L.A. Times he's never seen the penalty assessed before.
"I've never even heard of the gross valuation misstatement penalty being asserted,"
The L.A. Times article noted several discrepancies between the value put on several items by the estate and the amount the IRS estimated them to be worth.
1. The IRS estimates Jackson's likeness to be worth more than $434 million. The estate listed it at $2,105.
2. The estate listed the value of Jackson's interest in the trust that owns the pop star's songs and part of The Beatles' catalogue at zero. The IRS estimates it's worth $469 million.
3. Another trust said to be worth just $2.2 million by the estate is actually worth $60.6 million, according to the IRS.
If the full amount said to be owed has to be paid Jackson's children, Blanket, Prince Michael and Paris will be dealt a significant financial blow.
Expect the estate to vigorously fight the judgement.
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