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Michael Jackson's estate fights IRS in tax court

WASHINGTON (Reuters) -- The estate of pop music legend Michael Jackson is fighting the Internal Revenue Service over taxes and penalties levied on a wide range of the star's assets, including the Neverland Ranch, his "image and likeness" and some recording properties, according to court documents.

The estate's challenge, filed in U.S. Tax Court, does not disclose any dollar amounts, suggesting the differences in estate taxes paid and allegedly owed could be significant, said tax lawyers who reviewed the court filings on Tuesday.

The dispute centers on the value of estate assets at the time of Jackson's death on June 25, 2009. Some assets, such as the star's image and likeness, are extremely difficult to value for tax purposes.

Bing: Michael Jackson wrongful death lawsuit

Under tax law, the penalties associated with the IRS's allegations could be as high as 40 percent of the difference between the taxes paid and those allegedly owed for some of the items.

Though dollar amounts in the documents are redacted, the IRS's deficiency notice said the tax agency levied penalties on the value of Sycamore Valley Ranch Company LLC, which includes the Neverland Ranch, according to the court filings.

The IRS issued a tax deficiency notice to the estate in May, and the estate filed its challenge in tax court on July 26. The IRS has 60 days to respond to the U.S. Tax Court challenge.

Negotiators for the IRS and the estate have held meetings for more than a year to try to resolve the valuation differences, said Charles Rettig, one of the lawyers representing the Jackson estate. He declined to say how much in taxes and penalties are in dispute.

"The government believes estates of celebrities likely have a significant audit potential," Rettig said on Tuesday. "The estate believes the estate tax return properly reflected the interests of Mr. Jackson as of the date of his death."

An IRS spokesman declined to comment.

Under U.S. Tax Court rules, the Jackson estate will not need to pay any taxes or penalties unless the court rules for the IRS.

Jackson died at age 50 from an overdose of the surgical anesthetic propofol while rehearsing for a series of comeback concerts in London.

"The Michael Jackson estate was on a clear collision course with the tax court," said Bridget Crawford, a tax professor at Pace Law School, who reviewed the tax court filings.

Aug 22, 2013 10:55AM

Actually, what they need to do is put EVERYTHING he owned into the Staples Center & lock the whole family in there with all the stuff........


Whoever comes walking out of the place gets it all............


NOBODY CARES about the fruity little @ssbandit OR his greedy, worthless family..........

Aug 22, 2013 10:52AM

They're trying to claim 300 truckloads of VASELINE & write it off as an "Entertainment expense".....



Aug 22, 2013 12:58AM

Someone who can t take the truth deleted my post;

It s no secret that Michael Jackson was a penniless out of control junkie and PEDOPHILE

I can t believe you morons buy his products

Also , this man has no children
Aug 21, 2013 11:29PM
When your dead, you should not owe any more taxes period!  Not the dead person's fault that the IRS is incompetent and didnt collect any taxes due while he was living.  Also any estate that is left to heirs, there should be no taxes up front for inheriting the estate.. Greedy government, they already got taxes on the estate for previous years of taxes, this I would call double taxation...
Aug 21, 2013 9:24PM
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