The six-year lawsuit for the estate of the pop superstar Prince is over, which means that the process of distributing the artist’s wealth may begin next month.
The Minneapolis Star Tribune reports that the Internal Revenue Service and the estate administrator of Comerica Bank & Trust have agreed to value the Prince’s estate at $ 156.4 million, with this figure also agreed to by the artist’s heirs. (All values in US dollars, unless otherwise indicated.)
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This estimate exceeds Comerica’s previous estimate of $ 82.3 million. The Internal Revenue Service in 2020 estimated the estate at $ 163.2 million.
Prince, who died of a fentanyl overdose in 2016, has left no will.
Since then, lawyers and consultants have been paid tens of millions of dollars to manage his estate and devise a plan for its distribution. Since then, two of the six heirs of the Prince’s siblings, Alfred Jackson and John R. Nelson, have died. The other two are 80 years old.
“It’s been a long six years,” L. Londel McMillan, a lawyer for the Prince’s three siblings, said at a hearing Friday in Carver County District Court.
Eventually, the estate will be almost equally divided between the well-funded New York music company – Primary Wave – and the three oldest of the six heirs of the music icon or their families.
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The IRS and Comerica settled last spring on part of the Prince’s estate. But a more complex task of valuing intangible assets, such as the Prince’s music rights, was not completed by October.
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Under the agreement, the IRS abolished the “penalty for accuracy” of $ 6.4 million, which was imposed on the Prince’s estate. The Minnesota Revenue Department, which approved the property appraisal, also lifted the penalty for accuracy, the statement said.
Taxes on the Prince’s fortune will amount to tens of millions of dollars.
Under federal law, just over $ 5 million of the Prince’s property will be exempt from taxes, but after that the tax rate is 40 percent. In Minnesota, the first $ 3 million is tax-exempt; after that much of the Prince’s property is likely to be taxed at 16 per cent.
In mid-2020, Comerica sued the IRS in the U.S. Tax Court, claiming that the agency’s real estate value calculations contained many errors. The tax court, scheduled for March in St. Paul, was overturned due to the settlement.
Comerica said in a court statement on Friday that although the agreement with the IRS was “fair and reasonable”, it believes it “prevailed” in the tax court case. Comerica said it had told the Prince’s heirs that if lower property taxes were their “core interest”, they should keep pushing the IRS and – if necessary – go to court.
“Instead, members of the group of heirs unanimously declared (Comerica) their strong desire for the property to settle with the tax authorities,” the statement said.
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