IRS says Prince’s estate was undervalued by $ 80 million

MINNEAPOLIS – The ongoing controversy over the money Prince left behind when he died without a will heats up again after Internal Revenue Service calculations showed the executors of the rock star’s estate under-took him. valued at 50%, or roughly $ 80 million.

The IRS determined Prince’s estate to be worth $ 163.2 million, eclipsing the $ 82.3 million valuation submitted by Comerica Bank & Trust, the administrator of the estate. The gap mainly concerns Prince’s music publishing and recording interests, according to court documents.

Documents show that the IRS estimates Prince’s estate owes an additional $ 32.4 million in federal taxes, roughly double the tax bill based on Comerica’s assessment, the Star Tribune reported.

The IRS also ordered a $ 6.4 million “accuracy penalty” on Prince’s estate, citing a “substantial” undervaluation of assets, according to documents.

Prince’s death from a fentanyl overdose on April 21, 2016 created one of the largest and most complex licensing proceedings in Minnesota history. Estimates of his net worth have varied widely, from $ 100 million to $ 300 million.

As Prince’s probate case drags on, his six brother heirs grow increasingly unhappy, especially as the estate has distributed tens of millions of dollars to lawyers and consultants.

Comerica and her attorneys at Fredrikson & Byron in Minneapolis maintain their real estate valuations are strong. Comerica sued the IRS this summer in U.S. tax court in Washington, DC, claiming the agency’s calculations were filled with errors.

“What we have here is a classic battle of the experts – the subject matter experts and the IRS experts,” said Dennis Patrick, an estate planning attorney at DeWitt LLP in Minneapolis who is not involved in the case. The valuation of a large estate, added Patrick, “is 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 lawsuit could significantly lengthen the settlement of Prince’s estate and generate more legal fees at the expense of Prince’s heirs, Patrick said.