Are Michael Jackson’s Memorial Expenses Tax Deductible?

Introduction

On June 25, 2009, pop star Michael Jackson died suddenly and last week, the world witnessed his huge L.A. send-off, replete with movie stars, recording artists and political savvy preachers.

If Jackson’s estate winds up paying the estimated $1.4 million in costs for the whole shebang, will these expenses be deductible?

General Rule

The cost of the last illness and funeral expenses may be deducted. According to tax regulations, deductible expenses include the private funeral, transportation of Mr. Jackson’s body to its final resting place and reasonable maintenance of the burial cite, including any tombstone, monument, or mausoleum.

Public Memorial

A public memorial service, however, is not considered a funeral expense and should not be deductible.

The deduction is limited to necessary expenses incurred in connection with the decedent’s funeral, which would exclude a public memorial service attended by those not present at the actual funeral service.

Conclusion

Expect Jackson’s estate to claim a full deduction for the cost of the public memorial, then use the deduction as a bargaining chip with IRS regarding the amount of estate taxes owed. Complicating Mr. Jackson’s estate is the knotty issue of valuing the publicity rights to his name and likeness. Early estimates peg the estate tax at approximately $100 million. Stay tuned.

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