Michael Jackson's estate, which is valued at $1.125 billion, has been very "Bad," at least as far as the IRS is concerned. In fact, the King of Pop's estate may have to sell some assets in order to pay the IRS, according to L.A. Times.

The taxman has informed the executors of Michael Jackson's estate that they owe the IRS $505 million in taxes along with $197 million in fines. The fines were a result of the fact that the estate's attorneys undervalued the King of Pop's worth to only $7 million.

It turned out that at the time of his death, Michael Jackson was actually worth $1.125 billion, according to the report by the L.A. Times.

In an interview with the Times, tax expert Andrew Katzenstein said there are a lot of gray areas when valuating the assets of dead celebrities. For example, how much is selling merchandise with his likeness or on television commercials worth? The estate puts it at $2,105 while the IRS crunches the numbers and came up with $434 million.

"This is something unusual," he said. "He was one of the premier entertainers of our time. So there are really no comparables, and it leaves the valuation question open to a huge range of possibilities."

"Do I think his likeness was worth $2,105? No. But was it worth $400 million?" he added.

In a report by MailOnline, citing tax court documents, Michael Jackson owned a 2001 Bentley Arnage and three Rolls-Royce which were worth $250,000 instead of the $91,600 reported by the estate.

The IRS claimed that "tangible personal property including vehicles not reported otherwise" were worth $47.467 million. How about Michael Jackson's estate's valuation of these tangible properties? $0.

MailOnline reported that the estate earned $475 million based on the court filing in the middle of 2012. Michael Jackson's estate also earned $160 million in October 2013, according to Forbes magazine.