IRS Says Michael Jackson's Estate Owes $702 Million

| by Sarah Fruchtnicht
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The Internal Revenue Service filed charges in U.S. Tax Court alleging that the Michael Jackson estate owes $702 million in federal taxes after undervaluing his assets by hundreds of millions.

The IRS says Jackson’s family valued his likeness at $2,105, but that number is more like $434 million, NBC reported.

The IRS also totaled up the value of the King of Pop’s recording assets to $469 million. The family didn’t include any payment on the recording assets in their 2009 estate filing.

"Every estate wants to lowball the value of assets," Alex Raskolnikov, a professor at Columbia Law School, who specializes in tax law, told NBC. "The amount of tax an estate has to pay is based on the value of the assets."

Having to value likeness or image, rather than physical assets, Raskolnikov said it is a process “prone to disagreement.”

"If they (Jackson estate) do not settle,” he said, “the IRS will get its experts and the family will get theirs and there will be different valuations."

The 2009 estate filing said Jackson’s estate was valued at just $7 million. In May the IRS said that was deficient by $505.1 million, plus penalties of $196.9 million, according to U.S. Tax Court documents released Tuesday.

A spokesperson for the Jackson estate told Reuters the IRS complaint is "based on speculative and erroneous assumptions unsupported by the facts or law."

The spokesperson state that the estate has paid $100 million in taxes.

Raskolnikov said, “given the valuations, I do not think the family will want to go to court.”

Jackson died June 25, 2009, and left his estate to his mother Katherine, various charities, and his three children Prince I, Prince II, and Paris.

Sources: MSN Now, NBC