Posted on Sat Feb 8, 2014 12:30 PM PDT
Michael Jackson's estate reportedly owes $702 million in federal taxes and penalties for undervaluing the star's assets and legacy by hundreds of millions of dollars.
According to documents filed with the U.S. Tax Court, Jackson's estate set his net worth after his death in 2009 at slightly more than $7 million. The Internal Revenue Service, on the other hand, placed it at $1.125 billion. Meanwhile, the estate said his image and likeness were valued at $2,105 and the IRS determined it was worth $434 million.
The IRS said Jackson's return was so erroneous that it qualified for a "gross valuation misstatement penalty," which would double the usual 20% penalty for underpayment. However, the estate won't need to pay any fees unless the court rules in favor of IRS claim.
A rep for the Jackson estate told Reuters that the IRS's appraisal values "were based on speculative and erroneous assumptions unsupported by the facts or law" and that the estate has paid $100 million in taxes.
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