I.R.S. Says Prince’s Estate Worth Twice What Administrators Reported
For nearly five years, Prince’s estate has been one of the music industry’s longest and most complex legal thickets, as the star’s heirs have merged into two factions and business disputes have developed over Prince’s famous “vault” of unreleased music.
Now the property has a problem with the IRS too
In filing with the U.S. Treasury Court, it becomes clear that the estate and federal government differ widely in the value of many of Prince’s assets, including real estate, music rights, and the value of Prince’s name and likeness. According to the Internal Revenue Service, the property is valued at $ 163.2 million – roughly double that claimed by Comerica Bank & Trust, the estate’s administrator, for $ 82.3 million.
The judicial filing includes a copy of the IRS’s June 2020 “Notice of Defects” stating that the estate will be subject to additional federal taxes of $ 32.4 million as of 2016 and an “accuracy fine” of $ 6.4 million owes. Comerica has filed for litigation in St. Paul, Minnesota.
Prince died in April 2016 at the age of 57 from an accidental overdose of an opioid pain reliever. But while he was known to retain ownership of much of his work, including his music publishing rights – the copyrights associated with his songwriting – he left no will.
Much of the discrepancy in ratings is related to Prince’s music rights. The property had set the value of NPG Music Publishing, the collection of its songwriting copyrights, at $ 21.2 million. The IRS believes it is actually worth $ 36.9 million. The estate had also set the “writer’s share” of Prince’s songwriting rights at $ 11 million, but the IRS believed this was worth $ 22 million.
And the IRS estimates Prince’s ownership of his record label NPG Records at $ 46.5 million, not the $ 19.4 million the estate claims.
The papers also show that the estate and the IRS differ in the value of various properties Prince owned, including approximately 149 acres of vacant land in the Minneapolis suburb of Chanhassen, Minnesota, where Prince maintained his studio and creative headquarters. called Paisley Park. According to court records, an independent appraiser had set the value of this land at $ 11 million, but the IRS said its fair market value was actually $ 15 million.
Representatives from Comerica, who acts as the “personal representative” of the estate, playing a role similar to an executor, declined to comment on Monday.
The tax dispute is the most recent complication in the estate that has had a series of issues that have resulted in billions in fees for attorneys but delayed payments to the six adult family members who are Prince’s heirs. (One of them, Alfred Jackson, a half-brother of Prince, died in 2019.)
For example, a $ 31 million deal with Universal Music for rights to Prince’s “vault” – his treasure trove of unpublished recordings – was overturned by a judge after Universal complained that an estate agent misled them about the rights exactly were offered. (The deal later went to Sony, which has released a number of albums since then.)
Alex Weingarten, a partner at Venable law firm in Los Angeles who is frequently involved in entertainment and probate litigation and is not involved in the Prince dispute, said Prince’s case was unusual in that it had no plan for his Property made. But the dispute with the IRS is not unexpected.
“Whenever you are dealing with real estate of significant size,” said Weingarten, “it is not uncommon for valuation disputes with the IRS to arise.”