A recent article in the Star Tribune says the executor of the estate of Prince, the late world-famous rock star, and the Internal Revenue Service are currently locked in a fierce estate and gift tax dispute. The IRS argues the executor has seriously undervalued the estate, and the executors claim the IRS’ calculations “are riddled with errors.”
Prince (full name Prince R. Nelson) died in April 2016 of an overdose of fentanyl. The fact that he had no will has resulted in complicated and extensive probate proceedings and wildly fluctuating estimates of the worth of Prince’s estate.
The executor of the estate is Comerica Bank & Trust, a financial services company headquartered in Dallas. According to the Star Tribune, Comerica filed a tax return in 2017, valuing the estate at $82.3 million. Last June, the IRS issued a notice of deficiency in which the agency claimed the estate was worth about double that much, $163.2 million, and owed an additional $32.4 million in taxes. The IRS assessed an accuracy-related penalty related to what it considered a “substantial” undervaluation of the estate.
The U.S. Tax Court’s docket shows that, in August 2020, Comerica petitioned the court for review and, at the same time, asked for a trial. At issue are the value of Prince’s real estate holdings and, most controversial, nontangible assets. The latter include ownership interests in music publishing, music compositions, and recordings. The article reports that at least one “deep-pocketed investor in music copyrights” has expressed great interest in acquiring the rights to Prince’s music.
Besides his reputation as a brilliant musician, Prince became famous for keeping tight control over the release and use of his music and for enforcing his intellectual property rights aggressively. Case research shows that Comerica, whose role as executor includes acting as “fiduciary charged with monetizing and protecting the Estate’s intellectual property for the benefit of [Prince’s] heirs,” seeks to continue along this path. It has set up the official Prince YouTube channel and has successfully litigated copyright infringement claims against those who have released unauthorized audio and/or video recordings of Prince performances (Comerica Bank & Trust, N.A. v. Habib).
Stay tuned for further reporting on this matter.