Michael Jackson was near bankruptcy banker testifies as court prepares to decide if his estate owes $1 BILLION in unpaid taxes 

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Michael Jackson was apparently on the verge of bankruptcy before his shocking 2009 death, according to an investment banker who testified on Tuesday in a tax trial where the IRS is taking on the singer's estate for up to $1billion in unpaid taxes. 

The IRS alleges that the singer's estate has undervalued assets, but overseers of Jackson's estate say the artist was virtually worthless at the time of his death and was millions in debt.

Investment banker David Dunn took the stand in U.S. Tax Court in Los Angeles and said Jackson was 'on the edge' of going bankrupt before his death, according to the New York Daily News. 

'He was on the edge,' Dunn testified. 'He was desperately trying to figure out what he could do to address his financial crisis.'

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Investment banker David Dunn (right) took the stand in U.S. Tax Court in Los Angeles on Tuesday and said Michael Jackson (left) was 'on the edge' of going bankrupt before his death

Dunn was first hired in 2007 to help Jackson recover from the brink of bankruptcy after his 2005 child molestation trial left him millions in debt as one of his lenders, Bank of America, bolted.

Dunn, who is a partner at Shot Tower Capital, explained the numerous attempts he made to restructure the singer's increasing debt, but Jackson often undermined him at the last minute by agreeing to unfavorable deals that lured him with  upfront cash. 

The banker said that in early 2008, Jackson was in a 'very precarious situation' with more than $300million in debt, as he had out-of-control spending habits while the once-luxurious Neverland Ranch was near foreclosure.  

'We talked about his sadness in knowing he was never going to live in Neverland again,' Dunn said. 

'It was the culmination of the molestation allegations, the culmination of recognizing the financial situation he was in.'

Dunn shared that he chatted by phone at least once a month with the Smooth Criminal hit-maker. 

The IRS alleges that the singer's estate has undervalued assets, but overseers of Jackson's estate say the artist was virtually worthless at time of his 2009 death and was millions in debt. Jackson is pictured in 2005 during his child molestation trial that after left him in more debt

The banker said that in early 2008, Jackson was in a 'very precarious situation' with more than $300million in debt, as he had out-of-control spending habits while the once-luxurious Neverland Ranch (file above) was near foreclosure

'He talked about his young career and being at his peak. He was struggling with how to make a living and still be with his children, who were of paramount importance,' Dunn explained. 

The banker also revealed that even the Rev. Jesse Jackson tried to have a breakthrough with Jackson during a 'lecture' about his finances in Las Vegas.   

'He just said, 'Michael, this is you, you've got a bucket, and this tap here is your cash flow. …We've got to put a bottom on your bucket, you have to stop spending,' Dunn recounted.

Dunn stated that the singer 'borrowed  a lot of money, he knew he had financial issues … but the last thing he wanted to do was tour. He was looking for other things to generate income to avoid doing what he wound up agreeing to do.'

Jackson was so far in debt, that Dunn hadn't been paid in two years and was owed roughly $300,00 by the singer. 

But despite Jackson's financial state, Dunn resigned in May 2009 to continue working with him because it was difficult to tell 'which way was up, which way was down.' 

Dunn stated that the singer 'borrowed a lot of money (and) he knew he had financial issues'. Dunn was first hired in 2007 to help Jackson recover from the brink of bankruptcy after his 2005 child molestation as one of his lenders, Bank of America, bolted

Dunn said that around this time, Jackson agreed to going on a comeback tour and had begun to surround himself with people who made him feel 'uncomfortable.' 

The King of Pop died June 25, 2009 from an overdose of the surgery-strength anesthetic propofol that he was using as a sleep aid while preparing for the 'This Is It' tour. 

Dunn said that after Jackson's untimely death, interest in his music spiked sky high. 

The new revenue coming into his estate allowed for the singer's debt to be refinanced, as new income was generated with the 'This Is It' concert movie and the gainful Cirque du Soleil show in Las Vegas. 

The IRS first claimed in 2013 that the Jackson estate had undervalued assets which included the worth of his image and likeness when he died. 

His estate claims that the father-of-three was virtually worthless when he died in 2009 and states that his image was tarnished by his child molestation trial and the media coverage of his unique personal life.