The king of taxes?

March 11, 2014 by Eric Linden
Silhouette of Micheal Jackson

Michael Jackson stirs up many good memories for me. I mean he is the Elvis of my generation. I vividly remember getting his Thriller record for Christmas in 1984 and staring at the cover with my sister. We thought he was just the coolest guy on Earth. The King of Pop, as many loved to call him, definitely peaked in the mid 80’s and suffice it to say he could only go down from there. Child molestation accusations, drug abuse, financial issues, and now tax trouble! Even in death, Jackson’s ghost still wanders the halls of the United States Justice System.

Did you happen to see that Martin Bashir documentary on Mr. Jackson? One particular scene was quite striking. It filmed Michael shopping in a high end boutique at Ceasar’s Palace in Las Vegas buying everything within sight with no concern for price or taste! He obviously spent lavishly and, by many accounts, was in major debt at the time of his death. This brings us to the latest chapter in the Jackson saga and tax topics are what we are about. Introducing: The Estate of Michael J. Jackson, Deceased, John G. Branca, Co-Executor and John McClain, Co-Executor, Petitioner(s) v. Commissioner of Internal Revenue, Respondent (017152-13 U.S. Tax Court) . In a nutshell, Jackson’s estate produced an income number to the IRS that they just could not believe or accept. According to Robert W. Wood, a tax lawyer, in his blog on the American Bar Association website:

The IRS claims that the Jackson Estate owes a whopping $505.1 million in additional taxes and another $196.9 million in penalties. The penalties are based on the taxes due, so if the tax charge is struck down, the penalties go with it. Currently, the federal estate tax law allows $5.25 million per person to be passed tax-free. But in 2009, the year Jackson died, the exemption amount was only $3,500,000. 

This is shaping up to be a tax fight for the ages and a costly one at that. Nothing Jackson has done in life and death has been small and this is no different. Famous singers tangling with the IRS is nothing new. Remember Willie Nelson and most recently Lauryn Hill? Ms. Hill was convicted and even “did time” for her tax offenses. This case is different in the sense that Jackson did not evade taxes while alive. His estate is having issues and that is definitely not very surprising considering his incredible income and lavish spending. This will be fun to watch. Wily will keep you posted while I cut a little rug to P.Y.T.

Recent Articles

Woman wearing eyeglasses
Prescription eyeglasses for correcting your vision are deductible as a medical expense, but you may not be able to deduct them based on other factors.
IRS Audit
Generally, the IRS has three years form the date the return is filed to conduct an audit. However, there are exceptions to this three-year rule.
Money, United States Treasury Check, 1040 Tax Form
If you paid off a prior year state or local tax obligation to your state, you can include these payments as a state tax deduction, subject to the $10,000 cap.
standard deduction or itemized deduction
Most taxpayers are familiar with the terms standard deduction and itemized deductions, but many are unaware of the differences between the two.

Recent Articles

Woman wearing eyeglasses
Prescription eyeglasses for correcting your vision are deductible as a medical expense, but you may not be able to deduct them based on other factors.
IRS Audit
Generally, the IRS has three years form the date the return is filed to conduct an audit. However, there are exceptions to this three-year rule.
Money, United States Treasury Check, 1040 Tax Form
If you paid off a prior year state or local tax obligation to your state, you can include these payments as a state tax deduction, subject to the $10,000 cap.
standard deduction or itemized deduction
Most taxpayers are familiar with the terms standard deduction and itemized deductions, but many are unaware of the differences between the two.
This blog does not provide legal, financial, accounting, or tax advice. The content on this blog is “as is” and carries no warranties. TaxAudit does not warrant or guarantee the accuracy, reliability, and completeness of the content of this blog. Content may become out of date as tax laws change. TaxAudit may, but has no obligation to monitor or respond to comments.