Ever wondered how difficult, if not impossible, it would be, to calculate monetary value of someone’s
personal brand or reputation!
In one of the intriguing cases, US Tax Court valued Michael Jackson’s reputation, at the time of his death.
Basically, US IRS charges ‘estate tax’ on transfer of deceased person’s estate
After the pop-star passed away, a dispute arose on the valuation of his estate, where one interesting asset under dispute was Jackson’s
“likeness and image”
The “likeness and image” is considered as an intangible asset and can be included in the estate for charging tax
But valuing such intangibles as personal brand or reputation is not an exact science.
In fact, the Manager of the estate valued it at $3mn, but US IRS valued “likeness and image” at whooping $161mn!
But, how does one fairly value such an asset?
Well, the US Tax Court valued it at the $4mn, ruling significantly in favor of the Managers of the estate
In doing so, the court took into account factors like,
- revenues from licensing agreements and merchandise,
- economic trends in the pop music industry and
- the length of the remaining music copyright
Accordingly, although valuing intangible asset is particularly challenging, Valuation Experts establish certain framework to arrive at a fair value, if not an exact value.