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MINNEAPOLIS (AP) — The six-year legal battle over the estate of pop superstar Prince is over, meaning the process of distributing the entertainer’s wealth could begin next month.
The Minneapolis Star Tribune reports that the Internal Revenue Service and estate administrator Comerica Bank & Trust have agreed to value Prince’s estate at $156.4 million, a figure that the artist’s heirs also accepted.
Prince, who died of a fentanyl overdose in 2016, left no will.
Since then, lawyers and consultants have been paid tens of millions of dollars to administer his estate and develop a plan for its distribution. Two of Prince’s six heir siblings, Alfred Jackson and John R. Nelson, have since died. Two others are in their eighties.
“It’s been six long years,” L. Londell McMillan, attorney for three of Prince’s siblings, said during a Friday hearing in Carver County District Court.
Ultimately, the estate will be almost evenly split between a well-funded New York music company – Primary Wave – and the three oldest of the music icon’s six heirs or their families.
The IRS and Comerica moved into the real estate portion of Prince’s estate last spring. But the more delicate task of valuing intangible assets such as the rights to Prince’s music was not completed until October.
As part of the deal, the IRS waived a $6.4 million “accuracy penalty” it imposed on Prince’s estate. The Minnesota Department of Revenue, which agreed to the estate valuation, also waived a penalty for accuracy, according to the filing.
Prince’s wealth taxes will reach tens of millions of dollars.
Just over $5 million of Prince’s estate will be exempt from tax under federal law, but thereafter the tax rate is 40%. In Minnesota, the first $3 million is tax exempt; after that, much of Prince’s estate will likely be taxed at 16%.
In mid-2020, Comerica sued the IRS in US tax court, claiming the agency’s calculations of estate value were riddled with errors. A tax trial scheduled for March in St. Paul was canceled due to the settlement.
Comerica, in a court filing on Friday, said that even if the IRS settlement was “just and reasonable,” he believes it would have “prevailed” in the tax court case. Comerica said he told Prince’s heirs that if lowering estate taxes was their “primary interest,” they should continue to lobby the IRS and, if necessary, take legal action.
“Instead, the members of the heir group have uniformly communicated to (Comerica) their strong desire that the estate be settled with the tax authorities,” the filing said.