Michael Jackson’s estate granted “huge victory” in court case over singer’s worth

The estate had been in a tax-related lawsuit with the Internal Revenue Service for years

The estate of Michael Jackson has been given a legal win against the US tax authority regarding how much the late artist was worth at the time of his death.

As covered by The Hollywood Reporter, the court case centered on how much tax Jackson’s estate owed the Internal Revenue Service following his death in 2009, based on his assets, image and likeness. The singer’s contested investments included New Horizon Trust II, which included his stake in Sony/ATV Music Publishing, and New Horizon Trust III, which included Mijac Music, a publishing catalogue.

While the IRS valued Jackson’s image and likeness at £313,000 ($434million), the estate initially issued a starkly different valuation of approximately $2,000. The reason for this difference was the estate claimed Jackson’s reputation had been damaged by allegations of child molestation. The estate would subsequently increase its valuation to $3million.

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While experts for the estate valued Jackson’s image based on public perception and the prospects of similar deceased celebrities, such as Elvis Presley or Princess Diana, the IRS focused more on “foreseeable opportunities” such as themed attractions, merchandise, films, shows and musicals.

Ultimately, in his 250-page ruling, Judge Mark Holmes valued Jackson’s image and likeness at $4.15million at the time of his death, finding the hypotheticals put forward by the IRS to be “unreliable and unpersuasive”. He also found Jackson’s interest in New Horizon Trust III to be just over $107million and his interest in New Horizon Trust II to be valueless because its liabilities exceed its assets by $89million at the time of his death.

“Jackson had outlived the peak of his popularity, but in the decades before his death he kept spending as if he had not,” Holmes wrote in his ruling.

“Just as the grave will swallow Jackson’s fame, time will erode the estate’s income. It resurrected and then sold what became its most valuable asset to Sony before trial. The value of what it has left, no matter how well managed, will now dwindle as Jackson’s copyrights expire and his image and likeness shuffle first into irrelevance and then into the public domain.”

Co-executors for Jackson’s estate, John Branca and John McClain, labelled the decision as a “huge, unambiguous victory for Michael Jackson’s children”.

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“For nearly 12 years Michael’s estate has maintained that the government’s valuation of Michael’s assets on the day he passed away was outrageous and unfair, one that would have saddled his heirs with an oppressive tax liability of more than $700million,” they said.

“While we disagree with some portions of the decision, we believe it clearly exposes how unreasonable the IRS valuation was and provides a path forward to finally resolve this case in a fair and just manner.”

Jackson’s estate was also granted another legal win earlier this year, when a sexual abuse lawsuit filed by choreographer Wade Robson against the singer was thrown out. The lawsuit also alleged MJJ Productions and MJJ Ventures played a role in facilitating the abuse.

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