Monday, July 13, 2009

Death and Taxes: Big IRS Bill Looms for Michael Jackson’s Estate

It seems like every time you turn on CNN or check Google News there is another story about Michael Jackson. However, when I came across this article from the Associated Press with the tagline “the Tax Man is in the mirror for the estate of the late King of Pop” it caught my interest. The story claims that Jackson’s estate could end up owing more then $80 million to the IRS.

“To settle his tax bill, the executors of his estate may have to sell or borrow against lucrative but hard-to-value assets or ask the IRS for a multi-year extension. That could allow the estate to pay the tab over time with earnings from Jackson's share in rights to songs by the Beatles and his own music — prized properties whose value will likely make the estate's tax bill only bigger.”

"The government is not going to take a Beatles record as payment. They want to be paid in cash," said Roy Kozupsky, a veteran estate lawyer in New York who has worked on behalf of several wealthy clients.

“Given the convoluted nature of Jackson's finances, coming up with the cash won't be easy. Technically, the tax bill is due nine months after the date of death. In special cases, estates can spread out the payments for a period of up to 14 years. Once paid, the tax bill could dramatically shrink the inheritance passed on to the pop star's heirs — his 79-year-old mother and three children.”

To learn more about how estate taxes are calculated, check out this entry I posted in June titled “Everything you Need to Know About Taxes After Death.”

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