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It’s not often that the Internal Revenue Service admits making mistakes. After all, the IRS is probably used to exposing taxpayer mistakes when it comes to reporting income. But according to a recent article, it is being reported that the IRS made a mistake when valuing the estate of the Michael Jackson. Initially, the tax sought on the late King of Pop’s estate was $702 million, which was more than six times the amount reported on the estate tax return submitted by Jackson’s legal team. 

However, after IRS auditors learned that Jackson owned certain master recordings outright, instead of having a 50 percent ownership as initially believed. The difference in ownership meant that Jackson’s interest in the recordings was $91 million. This difference resulted in an increase of the taxable amount of Jackson’s estate.

With that, the IRS believes that the tax owed on the estate is now $731 million, which includes $526 million in (base) taxes, in addition to $205 million in penalties due to valuation misstatements. Aside from the different valuation of the masters, there is still a significant dispute over how much the other assets are valued at. For instance, the IRS believes that the value of Jackson’s image and likeness is worth well over $400 million at the time of his death, while lawyers for Jackson’s estate believe that he had no value.

The dispute over Jackson’s estate tax can be viewed as a cautionary tale for people with estates valued at over $5 million as a great deal of it could be sacrificed through federal estate taxes.