In May, the U.S. Tax Court said Michael Jackson's image was worth under $4.2 million, much less than a $161 million estimate by the IRS in its dispute with the estate of the pop megastar over the valuation of his assets.
Michael Kosnitzky, co-leader of Pillsbury’s Private Wealth practice, told Law360 that the government overreached in its attempts to collect taxes "based on the benefit of hindsight" in the Jackson estate case. The valuation experts for the IRS weren't as prepared as the estate's witnesses, who provided a more thorough analysis of the value of the different assets in the estate, Kosnitzky said.
"How they might exploit the asset in the future; that's not the law. It was inventing law," he said. "It was a wish list for the government, [but] the law is that it's a snapshot at death."
Kosnitzky said the Jackson case will be a good tool to use as a reminder that the government isn't permitted to overvalue an estate's taxed assets based on the unforeseen increase in value following death.
Read more in Law360.