Prince's Estate Tax Bill Due This Week: Why It's So Big and How It Could Have Been Avoided
publish date: 2017-01-17
"Money Don't Matter 2 Night," Prince once sang. But his money matters a lot to the IRS, and the case provides a cautionary tale not just for the wealthy, but not-so-rich Americans as well.
Prince's estate has until Saturday to file an estate tax payment for the late rock superstar, and the taxes are expected to ultimately swallow nearly half the estate's estimated $200 million value, meaning a likely windfall of roughly $100 million for the government. Estate law experts say Prince could have prevented that. Here are the issues:
WHY THERE'S SO MUCH MONEY: Prince left no known will when he died in April of an accidental painkiller overdose, and apparently did nothing to shelter his assets from the taxman. So, federal and state taxes will claim roughly half of it, said Mark Bakko, leader of the tax practice in the Minneapolis office of the accounting firm Baker Tilly, which is not involved in the case.
The value of Prince's estate when he died is subject to a federal tax of 40 percent and Minnesota's tax of 16 percent. With exclusions and deductions, the total bite will be closer to 50 percent. The estate can seek an extension for filing the return but can't delay the first payment.