Michael Jackson’s estate won a ruling that Jackson’s poor reputation late in his life means that his likeness is not as valuable as the IRS claimed.

Michael Jackson’s estate won a court ruling against the Internal Revenue Service over the value of the late singer’s likeness. The IRS had initially claimed that Jackson’s likeness was worth $434 million while the Jackson estate originally claimed it was worth just $24 (before upping their valuation to $3 million) and a judge essentially agreed with the estate, valuing Jackson’s likeness at just over $4 million.

The judge also ruled on the valuation of Jackson’s ownership of New Horizon Trust II (including his stake in Sony/ATV Music Publishing) and New Horizon Trust III (including Mijac Music, a publishing catalog that owned Jackson’s song copyrights as well as some other copyrights Jackson owned from other songwriters). These valuations are important as this determines how much tax the estate has to pay the government on these intellectual properties.

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Basically, the whole case turned on just how much the allegations of child abuse lodged against Jackson over the years hurt the singer’s reputation. His estate says that it dramatically hurt any value that could be derived from his name, while the IRS claimed that the estate could still, in effect, “cash in” on Jackson’s fame. U.S. Tax Court Judge Mark Holmes noted, “From the time he was a child Michael Jackson was famous; and there were times in his life, testified his executor, when he was the most famous person in the world. There were certainly years when he was the most well-known popular-music star, and even after his death there have been years when he was the world’s highest-earning entertainer. But there were also many years when he was more famous for his unusual behavior and not his unusual talent. And there were some years where his fame was turned infamous by serious accusations of the most noisome acts. We make no particular judgment about what Jackson did or is alleged to have done, but we must decide how what he did and is alleged to have done affected the value of what he left behind.”

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Holmes specifically criticized the IRS’ claim that there were a number of revenue opportunities for the estate, “Any projection that finds a torrent of revenue, and not just a trickle, from such a man’s image and likeness — especially one who in the last two years of his life was so unpopular he did not even have a Q score — is simply not reasonable.”

On top of the likeness being worth $4.15 million, Holmes ruled that Jackson’s interest in New Horizon Trust II was basically valueless (as Jackson had run up far too much debt) while New Horizon Trust III was worth $107 million.

Holmes summed up the financial situation of Jackson’s estate by noting, “Jackson had outlived the peak of his popularity, but in the decades before his death he kept spending as if he had not. Popular culture always moves on. There will come a time when Captain EO joins Monte Brewster and Terry Forbes as names that without googling sort of sound familiar, but only to people of a certain age or to students of entertainment history. And just as the grave will swallow Jackson’s fame, time will erode the Estate’s income. It resurrected and then sold what became its most valuable asset to Sony before trial. The value of what it has left, no matter how well managed, will now dwindle as Jackson’s copyrights expire and his image and likeness shuffle first into irrelevance and then into the public domain.”

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Source: The Hollywood Reporter

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