Prince fans continue to mourn his passing and his music is enjoying a resurgence, with 16 top songs on iTunes as of last weekend.
Meanwhile, the Internal Revenue Service (IRS) and the 57-year-old pop star's estate attorneys have begun considering the value of Prince's name, image and likeness to determine his estate's tax liability. This could be an ugly and, to any casual observer, patently unfair development for Prince's beneficiaries.
After reading about Prince's estate planning quagmire (not helped by the absence of a will) I am grateful to live in New Zealand where our Inland Revenue Department has other priorities than chasing taxes on future earnings from deceased celebrities.
Tax attorneys are buzzing over the valuation of Prince's estate. While his estate is said to be worth about US$300 million, making Prince one of the most valuable entertainers in the world, the value of his estate is expected to soar in the years ahead.
The songwriter's wealth includes more than just music and concert ticket sales. Paisley Park, his Minnesota home and recording studio, is worth millions. Then there is the potential windfall from the "vault" of up to 2,000 unreleased songs stored at Paisley Park. While not all will be hit songs, the stash might well include some valuable gems.
Prince was popular for a long time and died relatively young, so it is expected future royalties will be huge with the likelihood of ballooning popularity and a ballooning estate valuation.
The IRS and tax attorneys are used to putting price tags on tradeable assets such as property, music and royalty income. The bigger challenge is to value future earnings generated by Prince's estate.
The IRS wants a piece of that future value and, with a 40 per cent federal estate tax applied to amounts over $US5.45 million, as well as a state estate tax of 16 per cent, there is a lot at stake.
Apparently the IRS feels it got "burned" in the case of Elvis Presley's estate because it didn't anticipate how popular and valuable the Presley phenomenon would be after death. The estate tax settlement agreed after Elvis' death did not take full account of music and film royalties nor revenue from Graceland tours and merchandising.
A test case in February 2017 will have ramifications for the Prince estate. A years-long squabble between Michael Jackson's estate attorneys and the IRS will go to court next year, with the IRS claiming the estate is worth $US434 million and the estate attorneys claiming it is worth just $US2,105 (yes, you read it right).
Jackson's lawyers claim the pop star earned no more than $US50 million from the licensing of his name and image when he was alive. But, since his death in 2009, Jackson experienced a commercial re-birth thanks to the 2009 documentary This Is It, a Cirque du Soleil tribute show, video games and advertisements using Jackson's hologram.
The IRS estimates posthumous revenue and earnings have significantly boosted the estate value to many times the value at the time of Jackson's death.
What might Prince's estate be worth if someone was to follow Michael Jackson's model - product endorsements using Prince's hologram, a biographical film, a themed Cirque du Soleil show, the release of new songs and albums, and tours through Paisley Park?
This will be the biggest such case for the IRS and seems certain to keep Prince's name in the spotlight - ironically, boosting the value of his estate even more.
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