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Karen tweeted this:

Karen Faye ‏@wingheart Protected Tweets  · Oct 5
 
Branca is going to be haunted by the IRS for the rest of his life You are not allowed to view links. Register or Login

12:57 PM - 5 Oct 2014 · Details

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IRS: We Made A Mistake Valuing Michael Jackson's Estate

The Internal Revenue Service says it made a mistake in valuing Michael Jackson’s estate.  Nope, the IRS hasn’t abandoned its much discussed claim for $702 million in extra taxes and penalties—a bill Jackson’s estate is fighting in U.S. Tax Court.  Instead, the tax agency is upping its demand by $29 million to nearly $731 million.

In a previously unreported court filing, the government says that IRS auditors originally thought the King of Pop owned only 50% of certain master recordings at his death in June 2009, when he really owned 100% of them.  That 100% interest was worth $91 million by the IRS’ figuring, compared to the $11 million reported on the Jackson estate tax return.

The change brings the IRS’ valuation of Jackson’s estate and lifetime taxable gifts up to $1.178 billion, compared to the $7 million the estate reported.  The IRS now wants a total of $525.6 million in tax and $205.1 million in gross valuation misstatement and negligence penalties.
(Any interest owed will be on top of that.)
Of course both the IRS and the estate’s values are best regarded as opening bids in what could be a long negotiation. A trial, if there is one, is far off.

Indeed, in a joint status report filed with the Tax Court  last month, lawyers for the government and the estate say that while they’re close to settling four relatively small issues and have dueling appraisers discussing the value of Jackson’s personal  tangible property, they  don’t expect a speedy resolution of the big dollar issues in the case. Those involve the value of Jackson’s intangible and intellectual property  (his name, likeness and his  interests in music he wrote or performed) as well as the value of two trusts he apparently set up to borrow against his assets and to transfer assets to his heirs at minimal tax cost during his life.

The two trusts hold Jackson’s music publishing rights as well as his 50% interest in a joint music publishing venture with Sony Corp.  Known as Sony/ATV Music Publishing, the venture is the largest music publishing company in the world and owns or administers millions of songs, including Beatles songs Jackson bought back in the 1980s.  The estate placed the value of the assets transferred through the two trusts at just $2.2 million, whereas the IRS says the taxable value was $527.5 million.

Forbes senior editor Zack O’Malley Greenburg, who wrote a recent book on the Jackson business empire, estimates the Jackson estate has earned more than $700 million since the singer’s death, as his music has had a resurgence, with new releases, two Cirque du Soleil shows based on his work , the concert film This Is It and even an endorsement deal with PepsiCo PEP +1.15%.   But at the time of his death, the economy was in the dumps and Jackson’s image was considerably less golden,  in part due to allegations of child molestation. It’s the value of his image at death that matters for estate taxes.

The estate valued Jackson’s name and likeness at a trifling $2,105, whereas the IRS contends they were worth $434 million.  Despite the unique circumstances surrounding Jackson, the resolution could well affect how other celebrity estates are taxed in the future.

The value of a celebrity’s image was also at issue in two recent U.S.  Tax Court decisions involving the income taxation of endorsement and appearance fees paid to professional golfers Sergio Garcia and Retief Goosen and is an issue in an ongoing Tax Court case involving best selling crime writer Karin Slaughter. Ironically, in those  cases, the IRS has tried to maximize Uncle Sam’s tax take by minimizing the value of such intellectual property, while taxpayers have argued (and Tax Judges have agreed) that  a celebrity’s image has substantial value.

Karen also tweeted this after she posted the link to the article:

Karen Faye ‏@wingheart Protected Tweets  • Oct 5

Pearl and her BeLievers should look for clues that MJ is undercover and working for the IRS...LOL RT @BrighaONeill: @wingheart Ha ha... Maybe he should try crowd-funding? I'm sure Estate supporters would be more than happy to contribute...Lol

5:36 PM - 5 Oct 2014 • Details


Love you Michael!

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"In a previously unreported court filing, the government says that IRS auditors originally thought the King of Pop owned only 50% of certain master recordings at his death in June 2009, when he really owned 100% of them. "

I remember back during the Invincible era, one of the reasons Michael and Sony were at odds with each other was because Michael thought his master recordings would revert to him completely, but learned that it would still be many years before this happened.  In connecting this to the rumor that Michael was trying to fake his death back during the Invincible era, then it makes sense to me that he wanted to wait until he owned his master recordings 100% before faking his death.  Some people have thought that he couldn't fake his death back during Invincible because of 9/11, but this actually makes more sense. 

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Here are 3 documents, latest being from Oct. 2014:

[pdf]https://www.ustaxcourt.gov/InternetOrders/DocumentViewer.aspx?IndexSearchableOrdersID=138185[/pdf]

June 23rd 2014 – case is stricken from the court’s trial calendar – placed on a status report track; status report is due by September 19th, 2014

This case is on the Court's November 17, 2014 trial calendar for Los Angeles, California. Although a very large deficiency is at stake, the Court learned in a call with the parties on June 20, 2014 that it raises mostly valuation questions. The parties are cooperating in informal discovery and want to try to settle as many issues as possible at IRS Appeals. The Court agrees with their suggestion that the case be put on a status-report track, and it is ORDERED that this case is stricken from the Court's November 17, 2014 trial calendar for Los Angeles. It is also ORDERED that on or before September 19, 2014 the parties shall file a status report describing their progress in settling the case or narrowing the issues to be tried. It is also ORDERED that this division of the Court retains jurisdiction of this case.


[pdf]https://www.ustaxcourt.gov/UstcDockInq/DocumentViewer.aspx?IndexID=6396789[/pdf]

Oct. 10th, 2014 – answer due by October 29th, 2014

This case was on the Court's November 17, 2014 trial calendar for Los Angeles, California. On October 6, 2014, respondent moved under Tax Court Rule 37(c) that the undenied allegations in paragraphs 7-15 of its amended answer be deemed admitted. It is therefore ORDERED that petitioner file, on or before October 29, 2014, a reply as required by Rule 37(a) and (b). If petitioner fails to do so, the Court will grant respondent's motion, and the undenied allegations in the amended answer will be deemed admitted.

[pdf]https://www.ustaxcourt.gov/UstcDockInq/DocumentViewer.aspx?IndexID=6396844[/pdf]

October 14th, 2014 – status report due March 6th, 2015

This case was on the Court's November 17, 2014 trial calendar for Los Angeles, California. Although a very large deficiency is at stake, it raises mostly valuation questions. The parties recently reported that they are cooperating in informal discovery and trying to settle as many issues as possible at IRS Appeals. They reasonably ask to report again in the spring, and it is ORDERED that on or before March 6, 2015 the parties shall file a status report describing their progress in settling the case or narrowing the issues to be tried.


Love you Michael!

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