Michael Jackson is back in the news. The IRS added some $700 million to the reported value of Jackson’s estate, based on posthumous publicity rights valued by the estate at $1200. The news brought to light an interesting issue: To get a regular trial with a district judge on a tax deficiency, you have to pay the tax first.
Most people feel really great when they donate to charity, and the accompanying tax deduction can make the gift even sweeter. But recent cases show that the IRS is demanding strict compliance with its rules on substantiating charitable contributions, and messing up can mean losing the entire deduction.
Updated January 4, 2013: The American Taxpayer Relief Act of 2012 restores the original 3 percent phaseout of itemized deductions for income above $300,000 for married taxpayers filing jointly and $250,000 for single taxpayers. The Act also restores the 39.6 percent top rate for income above $450,000 for married taxpayers filing jointly and $400,000 for single taxpayers.
Most readers are aware that many provisions of the tax law “sunset” or expire at the end of 2012 if nothing happens before the end of the year. One little-noticed provision could help both sides move beyond the current impasse.