The family of Michael Jackson is celebrating a courtroom win against the IRS. This monumental judgment has sparked much discussion around the proper valuation methodologies for appraising Name, Image, and Likeness. Many estate planners are finding it difficult to secure adequate support to withstand IRS audits.
Celebrating a Lucrative Career
Most of the population covets the lifestyles of the rich and famous, often without taking time to realize the full burdens of publicity. Name, image, and likeness protections are relatively new developments. These laws and guidelines attempt to bring stability and consistency to some of the most concerning subjects that famous individuals face today.
The right to personal privacy and the ability to control revenue derived from their personal likeness are of top priority to most celebrities and wealthy individuals. A constant deluge of paparazzi threaten to spoil private or even sacred moments, even during periods of mourning. Imitators and unscrupulous business operators divert revenue from NIL prospects by releasing unauthorized recordings or merchandise.
The Struggle to Determine NIL Value
In addition to the potential loss of privacy and income during a thriving career, celebrities and wealthy families must continue the battle well after the peak of popularity. Estate planning services that begin during the height of a thriving career often extend even beyond the grave, when family members are left working with creditors and the IRS to settle estate debts.
The recent decision on the Michael Jackson estate provides hope for other families and celebrities looking to avoid litigation with the IRS. Huge disparities in anticipated value and actual value create tax nightmares and leave all parties weary and unable to negotiate a fair assessment.
Political Influence and Audit Protection
President Biden has made his position regarding taxation very clear. Beefing up the IRS staff for the purpose of increasing audits, the President plans to significantly increase tax revenue over the coming years. This incentive comes with varying degrees of support, but individuals on both sides of the fence are prompted to take corrective or preventive action.
Wealthy individuals who wish to protect their estate are reviewing assets and making plans to avoid an unwanted IRS audit. Tax and estate planning professionals like the experts here at Appraisal Economics offer an accurate glimpse into the tax liability of wealthy families. Independent valuations are a healthy measure that may prevent or at least scale back the negative results of an audit.
The benefits of having an appraisal performed early and updated periodically are extensive. As the case of Michael Jackson proved, the IRS may value an estate at a considerably higher dollar amount than is prudent. Only the individual or family can accurately speak to all the components that surround an estate. Tangible assets such as property and intangible assets such as reputation affect residual income and overall wealth. All factors should be considered when evaluating the true net worth of an estate.