When Michael Jackson passed away in 2009, he left behind a controversial legacy that has presented issues for both tax collectors and fans alike. Jackson’s reputation had been eroded over the years by allegations of drug and child abuse and well-documented eccentric behavior. Despite these past issues, Jackson’s estate has flourished. Executors John McClain and John Branca have entered into various deals, including a music deal with Sony, that have earned Jackson’s estate millions of dollars. Despite this recent explosion in revenue, the pair valued Jackson’s likeness at a surprisingly meager $2,105. They claimed that his damaged reputation was the reason for the low valuation. The IRS, as might be suspected, did not agree with the duo, claiming that Jackson’s likeness was worth over $400 million. Fortunately for Jackson’s estate, the Tax Court barred the IRS from seeking some penalties because it failed to adhere to certain procedural requirements. Though it remains uncertain how the Tax Court will value the estate and apply penalties, this trial may have significant repercussions for how celebrities handle their estate plans.
See Serafina Nicolais, What Does the IRS’ Michael Jackson Dispute Mean for Celebrity Estate Planning?, Lexology, February 16, 2018.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.
