A used Honda Civic: Why did Michael Jackson's estate claim his image was worth $2,105 in its fight with the IRS?

Michael Jackson died on June 25, 2009. But the global star had left behind a financially troubled estate with substantial debts and business liabilities. After his death, it became involved in a tax dispute. It happened with the US Internal Revenue Service (IRS). The issue was all about how much Jackson's name, image, and likeness rights were worth when he died. Jackson's estate initially valued his image and likeness rights at just $2,105 in its 2009 estate tax return. It also gained attention because it was comparable to the price of a used Honda Civic.

Why did Michael Jackson's estate value his image at just $2,105?

It was argued that his public image had suffered following child sexual abuse allegations and that his commercial reputation was damaged at the time of his death.

It argued that his financial difficulties, debts and business liabilities affected the commercial value of his name and image. The IRS disagreed. It was argued that his popularity made his image rights more valuable. Initially, the IRS valued his name and likeness at approximately $434.26 million. Notably, Jackson's total estate was valued around $482 million.


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Were any other assets involved in the IRS dispute?

Jackson's estate challenged the IRS assessment before the US Tax Court in 2013. Two major assets were involved. It included Jackson's 50% interest in Sony/ATV Music Publishing and his interest in Mijac Music.

What did US Tax Court rule?

It examined competing expert valuations and assessed the assets based on their actual financial and commercial circumstances in June 2009. It delivered its ruling on May 3, 2021. The US Tax Court rejected the estate's original $2,105 valuation as well as the IRS's much higher estimate.

The court determined that Jackson's total taxable estate was worth approximately $111.5 million.

The ruling was a major victory for Jackson's estate because it substantially reduced the potential estate tax liability.