Paris Jackson and her brothers, Prince and Blanket, could lose more than half the inheritance from their late superstar father, Michael Jackson, to the Internal Revenue Service (IRS), according to reports.
Prince, 20, Paris, 18, Blanket, 14, and their grandmother, Katherine — Michael Jackson’s mother — are locked in a legal battle with the IRS over a $700 million tax bill that could wipe out much of their inheritance, Radar Online reports.
The executors in charge of the late pop icon’s estate have been fighting the IRS in U.S. tax court in Los Angeles over the proper valuation of the rights to his name and likeness, with the IRS claiming that Michael’s estate owes more than $500 million in taxes and $200 million in penalties, according to the Wall Street Journal.
The court is expected to deliver a verdict on the IRS claim of $700 million in back taxes and penalties against Michael’s estate in a few weeks.
The executors of Jackson’s estate are John Branca and John McClain.
John Branca, a partner at the firm Ziffren Britten, has handled Michael’s record deals for decades, while John McClain, a veteran music industry executive, was Michael’s confidant, according to Bloomberg.
“Michael used to say to me, ‘You and I, Branca, we’re going to be examples for the business, we’re going to be the kings.'”
After Michael’s death in 2009, the executors filed documents claiming that the musician’s image was virtually worthless due to publicized allegations of drug use and child abuse against Jackson. According to the executors in charge of Jackson’s estate, the value of the late icon’s name and likeness was only $2,105 at the time he died.
They blamed the greatly diminished value of the assets at the time of his death on his tarnished reputation, due to allegations that he molested young boys who visited his Neverland Valley Ranch home in Santa Barbara County, California. They also blamed media gossip and rumors about his odd behavior, including skin bleaching, bizarre obsession with plastic surgery, prescription drug abuse, and odd parenting behavior, all of which earned him the epithet, “Wacko Jacko.”
But IRS lawyers initiated a court battle in U.S. tax court in Los Angeles in 2013, claiming that the executors grossly undervalued his assets, including the value of the late pop icon’s likeness and image.
The IRS now claims that the accurate valuation of the late pop icon’s name and likeness is $161 million, much less than the value of $434 million they ascribed to it in 2013, according to Fortune.
Based on the IRS’s estimate, the gross value of Jackson’s assets is $1 billion and $700 million of the total value is owed to the IRS in penalties and back taxes.
A tax bill of $700 million against Jackson’s estate would wipe out much of his children’s inheritance and plunge them into financial crisis.
According to Radar Online, a close friend of the Jackson family said that a court decision in favor of the IRS would “have a dramatic impact on a lot of lives,” including Michael’s 86-year-old mother, Katherine.
Jackson’s children are reportedly due to be paid their inheritance in installments, beginning from the time they turn 21.
Michael Jackson died suddenly in 2009 at the age of 50 in the midst of an effort to stage a career comeback. His personal physician, Conrad Murray, was convicted of involuntary manslaughter. He was accused of administering a lethal dose of anesthesia to his famous patient.
Michael is believed to have died of a fatal overdose of propofol and lorazepam administered by Murray.
Jackson was reportedly nearly bankrupt at the time he died.
“He was on the edge,” an investment banker, David Dunn, testified in the U.S. tax court in Los Angeles. “He was desperately trying to figure out what he could do to address his financial crisis.”
[Featured Image by Tim Whitby/Getty Images]