Court Rules on Value of Michael Jackson’s Image

In his ruling, Holmes said:

“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.”

Jackson’s estate has been in a legal battle with the IRS over taxes owed, with Holmes upholding the estate’s side. His ruling will cut down the estate taxes bill that Jackson’s mother and children will have to pay.

The IRS initially alleged that Jackson’s worth was $1.1 billion and that the estate had underpaid taxes by $500 million, ultimately tacking on another $200 million in penalties. The IRS later brought that number down to $161 million, citing “foreseeable opportunities,” including branded merchandise, themed attractions, a film, a Broadway musical, and more.  However, accusations of child molestation hit the Jackson brand hard, with the estate saying it was only valued at $2,000. At the time of the trial, the estate ultimately said their valuation was $5.3 million, and the IRS said it was $482 million.

Elsewhere in his decision, Holmes offered some piercing remarks about how the public will continue to view Jackson’s artistry: “Popular culture always moves on,” he said. “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.”

The co-executors of Jackson’s estate praised Holmes’ verdict, saying it was an “unambiguous victory for Michael Jackson’s children,” they wrote. “For nearly 12 years Michael’s Estate has maintained that the government’s valuation of Michael’s assets on the day he passed away was outrageous and unfair, one that would have saddled his heirs with an oppressive tax liability of more than $700 million.” The statement continued, “While we disagree with some portions of the decision, we believe it clearly exposes how unreasonable the IRS valuation was and provides a path forward to finally resolve this case in a fair and just manner.”


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