Michael Jackson's estate is being hit with severe tax penalties for alleged underpayment. The IRS says it owes $700 million.
Michael Jackson's estate handlers are in hot water with the Internal Revenue Service, who allege they drastically underestimated the singer's financial worth.
According to a report by the Los Angeles Times, at the time of the singer's 2009 death, executors entered his net value as $7 million. The IRS estimates that number should have been $1.1 billion.
Because of that disparity, the IRS has levied a rare gross valuation misstatement penalty, which doubles Jackson's tax rate from 20% to 40% for underpayment. They say the estate owes $702 million, or a principal balance of $505 million with an additional $197 million in penalties.
Among the issues being disputed:
• The Jackson estate valued his likeness at $2,105; the IRS puts it around $434 million.
• The estate put the worth of his song publishing catalog at $0; the IRS says it's worth $469 million.
• The estate estimated the value of a trust at $2.2 million; the IRS appraised it for $60 million.
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