Michael Jackson songs in Despicable Me 3 might be taxed heavily by IRS at tax trial 2017

MJ Songs In New 2017 Movie As Michael Jackson ‘Image’ Caught In $1 Billion IRS Tax Trial ‘Thriller’

Were the lyrics to Michael Jackson’s song “Thriller” a premonition about his posthumous row with the IRS?

Michael Jackson may be getting royalties long after his death for his legendary contributions to music, but new income from an upcoming 2017 Despicable Me movie might go directly to the tax man instead of his family.

Michael Jackson songs are extremely popular during Christmas, but MJ’s music is going to be revisited in a new movie just as his estate is embroiled in what some have called “one of the biggest tax trials” of all times.

Fans may be sad to see Michael Jackson embroiled in a tax trial that is to the tune of $1 billion. Despite this, MJ fans can get in a few laughs via the trailer for Despicable Me 3.

While the Despicable Me 3 movie is coming to theaters in the summer of 2017, the newly released trailer was put online around mid-December, and it features Michael Jackson in several ways.

For example, the Despicable Me 3 trailer is full of Michael Jackson references outside of his songs. This includes one of the main characters saying a phrase unique to Michael Jackson: shamone.

The word shamone was featured in Michael Jackson’s song “Bad,” and the tune itself has been incorporated into the 2017 Despicable Me movie. Also interesting is the famous Moonwalk dance that Michael Jackson popularized, and the way that Despicable Me uses MJ’s dance in the trailer.

Michael Jackson's image and taxes needed to be paid are subject to debate by IRS
After Michael Jackson’s death, the debate with the IRS became how much his mere image and the rights to his image were actually worth. [Image by Oli Scarff/Getty Images]

However, the rest of the news related to Michael Jackson is not so cheery, and it hardly remembers the best parts of his career.

Although his estate and tax bill have been discussed in the news for several years, Michael Jackson’s money is still being debated by courts in California and the reasons are surprising to those inside and outside the entertainment law world.

Around mid-December, it was reported by Hollywood Reporter that several professionals that managed Michael Jackson’s estate are being ordered to testify about a tax situation that revolves around an estimated $1 billion owed to the IRS.

The actual Michael Jackson trial over his taxes will begin in February 2017, and the big discussion that will be taking place is about the price of MJ’s image.

Although many people may conclude that an image of him in 2016 relates to the popular meme with Michael Jackson eating popcorn in the “Thriller” video, instead it relates to his value as a celebrity when he died.

In legal terms, the “posthumous right to his likeness” will be evaluated, and the IRS currently claims it is worth around $435 million, and the estate of Michael Jackson could owe up to $1 billion.

Outside of movies like the 2017 Despicable Me movie, Michael Jackson’s image has sold post-death albums, video games, the Cirque du Soleil tribute show about MJ, and other items such as merchandise.

Interestingly, the estate of Michael Jackson claims he was worth only $2,105 (not $435 million) when he died because he was embroiled in several scandals at the time including drug abuse rumors.

One of the points that may be argued at the 2017 Michael Jackson tax trial is why the IRS chose an astounding $1 billion as the amount to ask for in the case.

The tax bill situation with Michael Jackson’s estate has been looming since he died on June 25, 2009.

For example, on July 10, 2009, CBS News published a report about the mandatory federal estate taxes due seven months after the death of any celebrity. Since Michael Jackson’s estate was worth over $3.5 million, the federal tax rate was set at a whopping 45 percent.

In 2009, the IRS was originally asking for an estimated $80 million from Michael Jackson’s family in regular inheritance taxes.

In 2013, the American Bar Association reported on the case titled Estate of Michael Jackson v. Commissioner (017152-13 U.S. Tax Court).

At that time, the IRS claimed that the estate of Michael Jackson now owed more because of the multi-millions that was made from Michael Jackson’s legacy rights after he died.

In 2013, the IRS was only asking for “$505.1 million in additional taxes and another $196.9 million in penalties.”

It was also in 2013 that it was established that the issue the IRS was having was with valuing the Michael Jackson image. Again, the IRS estimated MJ’s image value to be at $434 million instead of the proposed $2,105.

Part of the claim pertained to successful posthumous entertainment projects that use Michael Jackson’s songs or presence in some way. For example, the movie This Is It is said to have paid several million to Michael Jackson’s estate since the movie was based on him.

Other forms of income to the MJ estate include a Las Vegas show based on Michael Jackson called ONE. In another example, Sega Genesis has made several video games over the years called “Moonwalker” that have paid to use the image of Michael Jackson.

Other potential assets the IRS might have a problem with outside of the image of Michael Jackson include his sale of some of his estate to Sony for $750 million.

Unfortunately, Michael Jackson is not the only celebrity that has had their estate brutalized by the IRS after death. According to Lexology, Whitney Houston and Michael Jackson have one shocking similarity: the IRS is after their money in any way possible.

Unlike Michael Jackson, Whitney Houston’s estate was valued at $36 million by the IRS while the estate of Whitney Houston gave an estimate of $14 million.

Michael Jackson tax trial could mean IRS can tax celebrities up to 150 percent of their remaining estate.
The IRS could end up gaining the right to tax celebrity estates for more than they are worth based on the value of the image of the celebrity after their death. [Image by Charley Gallay/Getty Images]

Another celebrity that ended up giving away most of their estate to the IRS was James Gandolfini. When the Sopranos star died, up to 80 percent of his $70 million estate was left open to be taxed at a rate of up to 55 percent including federal and state rates.

According to AOL, the money mistake that James Gandolfini made was only giving 20 percent of his estate to his wife in his will when there is an “unlimited deduction for estate tax purposes for gifts made to a surviving spouse.”

While James Gandolfini may have made a simple mistake that only worked to the advantage of the IRS, the issues with Michael Jackson are more complicated, and could be highly debatable in court.

Part of the issues that Michael Jackson’s fans might hear about in the February 2017 tax trial is whether “the right to use an image” will be established as a “defined income stream.” In other words, there is some legal debate about the after-death use of a celebrity’s image being taxable in the first place.

Also, unlike physical property or royalties that have an estimated value based on standardized systems, Michael Jackson’s case could help to define in legal terms what the value of a celebrity’s image is worth “based on a fair market value standard.”

Since something like Michael Jackson’s image is intangible, defining this legally could threaten a lot of other celebrities and their inheritance to their surviving family.

In the end, while it might be nostalgic for fans to see Michael Jackson’s songs being used in the new Despicable Me 3 movie, there is a possibility that the IRS will try to use MJ’s contribution as another way to tax his “image.”

If the IRS does get their wish and ends up pocketing a large percentage of MJ’s posthumous net worth, there might need to be a new meme of Michael Jackson eating popcorn with a second image where he reaches into the bucket and finds the IRS has already taken most of it.

Either way, it is clear that the Michael Jackson tax trial in February 2017 will definitely be a “Thriller” in more ways than one.

[Feature Image by Vinnie Zuffante/Hulton Archive/Getty Images]

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