Michael Jackson’s image is only worth around $4 million, according to U.S. tax courts.
That ruling is much lower than the $161 million estimate assessed by the IRS and disputed by the Jackson Estate. Ruling on the value of three assets at the time of Jackson’s death in 2009, the U.S. tax court found their combined value to be $111.5 million. That’s far less than the IRS valuation of around $482 million. Judge Mark Holmes says the value of Jackson’s image will fade over time.
“Popular culture always moves on,” Judge Holmes writes in his brief. “Just as the grave will swallow Jackson’s fame, time will erode the estate’s income.” The three assets in dispute between the estate and the IRS include Jackson’s right of publicity, his half interest in the Sony/ATV music publishing company, and his interest in his music catalog company, Mijac Music.
The Tax Court also found that the fair market value of Jackson’s interest in Sony/ATV was zero because of significant liabilities, resulting in no taxable income.
The IRS adjusted the value of these assets to $1.32 billion from $7 million, demanding $702 in taxes and penalties. The Jackson Estate disputed those valuations. The Tax Court agreed with the estate that the interest in Sony/ATV was worthless; it said the interest in Mijac Music should be valued at $107.3 million, rather than $2.3 million, as Jackson’s Estate argues.
Originally, the Jackson Estate only valued Michael Jackson’s image at $2,105. Appraisers said Jackson had very little income from his likeness when he died. Claims that Jackson sexually abused children also likely weighed on the value of his estate, the judge argued.
“Allegations that a celebrity molested little boys might reasonably be thought to repel potential licensees in any society that has not become completely decadent,” Judge Holmes writes. Another expert valued Jackson’s image to be worth over $3 million because of the revenue that could be generated during the legal copyright life of 70 years after the artists’ death.
The IRS’ expert valued the Michael Jackson image at $161 million based on potential future revenue from products, branded merchandise, a Cirque du Soleil show, a Broadway musical, and more. Judge Holmes says those future revenue streams were not foreseeable when Jackson died. His reputation was very low during the last ten years of his life, and Jackson received no income “related to the likeness of his image.” Those factors led the court to put the value of Jackson’s image at just $4.1 million.