Prince’s estate undervalued by 50% — IRS
The ongoing controversy
over the money left behind by Prince when he died without a will is heating up
again after Internal Revenue Service calculations showed that executors of the
rock star’s estate undervalued it by 50%, or about US$80 million.
The IRS
determined that Prince’s estate is worth $163.2 million, overshadowing the
$82.3 million valuation submitted by Comerica Bank & Trust, the estate’s
administrator. The discrepancy primarily involves Prince’s music publishing and
recording interests, according to court documents.
Documents show
the IRS believes that Prince’s estate owes another $32.4 million in federal
taxes, roughly doubling the tax bill based on Comerica’s valuation, the StarTribune reported.
The
IRS also has ordered a $6.4 million “accuracy-related penalty” on Prince’s
estate, citing a “substantial” undervaluation of assets, documents show.
Prince’s death of afentanyl overdose on April 21, 2016, created one of the largestand most complicated probate court proceedings in Minnesota history. Estimatesof his net worth have varied widely, from $100 million to $300 million.
With
Prince’s probate case dragging on, his six sibling heirs have grownincreasingly unhappy, particularly as the estate has doled out tensof millions of dollars to lawyers and consultants.
Comerica
and its lawyers at Fredrikson & Byron in Minneapolis maintain their estate
valuations are solid. Comerica sued the IRS this summer in US Tax Court in
Washington, DC, saying the agency’s calculations are riddled with errors.
“What
we have here is a classic battle of the experts — the estate’s experts and the
IRS’ experts,” said Dennis Patrick, an estate planning attorney at DeWitt LLP
in Minneapolis who is not involved in the case. Valuing a large estate, Patrick
added, “is way more of an art than a science.”
Comerica, a Dallas-based financial services giant, has asked the tax court to hold a trial in St Paul. A trial could dramatically lengthen the settlement of Prince’s estate and generate more legal fees at the expense of Prince’s heirs, Patrick said.
–AP
