MINNEAPOLIS: The six-year legal battle over pop superstar Princes estate has ended, meaning the process of distributing the artist’s wealth could begin next month.
The Minneapolis Star Tribune reports that the Internal Revenue Service and the estates administrator, Comerica Bank & Trust, agreed to value Prince’s estate $156.4 million, a figure that the artist’s heirs have also accepted.
The valuation dwarfs Comerica’s earlier $82.3 million appraisal. The Internal Revenue Service in 2020 had valued the estate at $163.2 million.
Prince, who died of a fentanyl overdose in 2016, did not leave a will.
Since then, lawyers and consultants have been paid tens of millions of dollars to administer his estate and come up with a plan for its distribution. Two of Princes six sibling heirs, Alfred Jackson and John R. Nelson, have since died. Two others are in their 80s.
It has been a long six years, L. Londell McMillan, an attorney for three of Princes siblings, said at a hearing Friday in Carver County District Court.
In the end, the estate will be almost evenly divided between a well-funded New York music company Primary Wave and the three oldest of the music icons six heirs or their families.
The IRS and Comerica settled last spring on the real-estate portion of Princes estate. But the trickier task of valuing intangible assets such as rights to Princes music was not completed until October.
As part of the agreement, the IRS dropped a $6.4 million accuracy-related penalty it had levied on Princes estate. The Minnesota Department of Revenue, which agreed on the estates valuation, also has dropped an accuracy penalty, the filing said.
Taxes on Princes fortune will run into the tens of millions of dollars.
Just over $5 million of Princes estate will be exempted from taxes under federal law, but thereafter the tax rate is 40%. In Minnesota, the first $3 million is tax-exempt; after that, much of Princes estate will likely be taxed at 16%.
In mid-2020, Comerica sued the IRS in U.S. Tax Court, saying the agencys calculations of the estates value were riddled with errors. A tax trial set for March in St. Paul has been canceled because of the settlement.
Comerica, in a court filing Friday, said that while the IRS settlement was fair and reasonable, it believes it would have prevailed in the tax court case. Comerica said it told Princes heirs that if lowering estate taxes was their primary interest they should continue pressing the IRS and if need be go to trial.
Instead, the members of the heir group have uniformly communicated to (Comerica) their strong desire that the estate settle with the taxing authorities, the filing said.
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