There were three main valuation matters in the case of the Michael Jackson estate versus the IRS, and the estate prevailed in two of them (see our most recent coverage here). During a recent BVR webinar, former IRS official Michael Gregory (Michael Gregory Consulting) discussed the case, and an interesting question came up from the audience. Gregory pointed out that the valuation expert for the IRS lied on the witness stand but not about his work on the estate valuation—the lies were about other matters. The judge did not exclude the expert’s testimony, instead saying that he would “discount the credibility and weight” he gives to the expert’s opinion of value. Had the expert not lied, what would the outcome have been? Instead of the estate going two for three, would it have been one for three? Would the IRS have prevailed in the case?

When a witness lies on the stand, it can be a fatal blow. That is, judges may discount or disbelieve everything the witness says. That extreme did not happen in this case, Gregory points out, because the judge sided with the IRS in one of the three matters. As to whether the overall outcome would have been different had the expert not lied, “it very well could have,” Gregory says, but “you never know.”

Extra: You can hear the testifying valuation experts for the Jackson estate give their inside view of the case during an upcoming BVR webinar, Power Panel: Estate of Michael J. Jackson v. Commissioner, on July 27. Don’t miss this one!