TAXATION
Artistes

 

More on Michael Jackson and this time it’s a claim brought by the Inland Revenue service (IRS) in the UD against the Estate of Michael Jackson for a gross underpayment of tax – the IRS claim the Jackson estate was significantly undervalued – in particular his image rights and the value of the Beatles songs catalogue Jackson owned and which are administered by music publisher Sony ATV. Neil Wilkof on the IPKat explains: Based on filings with the U.S. Tax Court, the Jackson Estate claimed a value of a little more than $7 million, while the Internal Revenue Service (IRS) gave a valuation of $1.125 billion. The discrepancy between the two valuations is not a typographical error. Indeed, the IRS sought to apply a seldom-used provision, known as the “gross valuation misstatement penalty”, to assess twice the usual amount of the penalty for underpayment (50%). Drilling down further, it appears that the dispute centres on two main assets. The first is the value of Jackson’s image, which the estate valued at only $2,105, while the IRS assigned a value of slightly more than $434 million. In addition, there is a dispute over the value of certain Jackson songs and most of the Beatles catalogue, held in trust and in which Jackson had an interest. The estate valued the songs at zero (!), while the IRS claimed an amount of $469 million. For the record, the IRS back in May 2013 had claimed that the estate was deficient by an amount of $505.1 million, with penalties of an additional $196.9 million (a spokesperson for the estate notably stated that the estate had in fact paid $100 million in taxes, despite the low initial valuation). The agency has told Jackson’s executors that the estate owes taxes and penalties totalling more than $702 million. Neither the IRS nor Howard Weitzman, the attorney for Jackson’s estate comment, commented publicly.

 

http://ipkitten.blogspot.co.uk/2014/02/valuing-michael-jacksons-image-science.html and http://articles.latimes.com/2014/feb/07/local/la-me-jackson-taxes-20140208