Prince’s estate involved in a dispute with the IRS
A recent online story found here outlines the latest developments with respect to Prince’s estate. Prince died on April 21, 2016 at the age of 57 without a will. It was later determined that he died of a drug overdose. He left an estate that was worth many millions of dollars. Because he died without a will, there was uncertainty as to who his heirs were. Extensive litigation followed and I have written on some of these matters including the naming of the heirs by a Court, a dispute involving Universal Music Group, and a wrongful death lawsuit.
Prince’s estate allegedly owes millions to the IRS
According to the latest story above, the IRS claims the estate has been undervalued by 50%. This amounts to approximately $80 million. According to the IRS, the estate should have been valued at $163.2 million. This number is much greater than the initial valuation of $82.3 million by Comerica Bank & Trust, the company acting as administrator.
Comerica Bank & Trust and their legal experts maintain that their estimate is accurate. Additionally, they have asked the Court to hold a trial in St. Paul, Minnesota. This will significantly lengthen what some observers have described as one of the most complicated probate Court proceedings in the history of Minnesota.
IRS claims Prince’s estate owes tens of millions in tax
Another significant allegation by the IRS is that Prince’s estate owes $32.4 million in federal taxes. This is based on the IRS taking the position that the estate is nearly double Comerica Bank & Trust’s valuation. From the outset, estimates of how much Prince’s estate is worth have varied greatly. Estimates have ranged from $100 to $300 million. It can be very difficult to place a value on a world-famous artist’s estate as it often involves future earnings which are difficult to predict. According to the story, some of the issues causing the discrepancy between the two valuations are music publishing and recording interests.
Additionally, the IRS has issued a $6.4 million penalty to Prince’s estate as a result of the alleged inaccuracy of the low valuation. Also, the estate has apparently already spent tens of millions of dollars on legal and consulting fees. As part of another recent Court filing, allegations have been made that Comerica Bank & Trust failed to fully inform the heirs on “business matters including the tax proceedings.” Comerica Bank & Trust has rejected this position.
None of the above allegations have been proven in Court. It is likely that this matter will be before the Courts for several more years.
This will be an interesting story to follow.
More on this story here.