Michael Jackson's estate is still collecting large amounts of income and still paying big income taxes. It is not unusual for celebrities to still get large amounts of income after their death, says Rob Wood, tax lawyer in San Francisco, California. In terms of estate tax, however, what's going on is the valuation of assets, such as one's rights to photos and intellectual property. Those assets can be worth a lot and that's what the IRS and Michael Jackson's estate are arguing about. Wood says that some people are saying that both sides are unrealistic in terms of the valuation that each has put on.
All valuation types of fights have to find a middle ground and Wood guesses this case will settle but also says there's enough money involved it may proceed to trial.
Spikes in revenue are subject to income tax so it can seem unfair one can face both income and estate tax, which is one of the arguments a few years ago when some Republicans argued that the estate tax should be repealed entirely. As that didn't happen, Wood doesn't think it will anytime soon. The question is, he says, is it also subject to estate tax?
Wood says that Jackson's lawyers are saying that the estate wasn't worth anywhere near what the IRS valued it at and it has spiked in value after his death, not before it or at it, just really after.
For more information on the article written in Forbes magazine about this, click here. Robert Wood is a tax attorney with Wood, LLP in San Francisco, California and spoke with The Tax Law Channel, an affiliate of The Legal Broadcast Network. The Legal Broadcast Network is a featured network of the Sequence Media Group.