James F. McDonough
Of Counsel
732-568-8360 jmcdonough@sh-law.comKey Contacts
Back
Estate tax is often a confusing and difficult field in normal circumstances, but things can really get complicated when an estate’s holdings are unusual.
One of those unusual holdings is art, which is notoriously difficult to value. A recent ruling by the Fifth Circuit Court may serve to clarify the way that art can be treated under estate tax law.
Affluent families that hold valuable pieces of art are often loath to part with them. If sentimental reasons aren’t enough, frequently, the 28 percent capital gains tax on any appreciation of value is, according to Forbes. However, if an estate breaks the federal estate tax exemption, these pieces of art are included in the estate tax bill at full market value.
James Elkins Jr., a prominent Houston, Texas businessman, and his wife who died before him gave partial shares of their art to their children, according to The New York Times. This tactic is common for more typical assets, like real estate or private business holdings. By transferring shares out of their names, but retaining a controlling share in many, Elkins and his wife were able to keep their art on their walls but reduce their eventual tax liability upon death.
However, the IRS avoids giving discounts on art, because it is difficult to sell shares independently, the news source explained. Art can only be in one place at a time, and a severe discount would be necessary to sell less than a controlling share to a non-family member, as this new owner would have little say in where the art is displayed, for example. For this reason, the IRS claimed that no discount should apply to the art.
Now, in a major victory for the estate and art collectors across the nation, the Fifth Circuit has ordered that the IRS return $14.4 million to the Elkins family and said that the estate’s initial 47.5 percent discount should be applied, according to Forbes.
Confused about your own estate taxes? Talk to a Scarinci Hollenbeck tax attorney today!
- Industries: Real Estate
- Practices: Commercial Real Estate, Tax and Trusts & Estates
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
IP Infringement: What Steps Can You Take If You're Affected?
IP infringement occurs when someone uses your intellectual property without your permission or beyond the scope of the permission you granted. Common examples of IP infringement include copying a product’s patented features or using a trademarked logo in a way that is likely to confuse consumers about the source or affiliation of goods or services. […]
Author: Michael Mietlicki
Public Allegations, Unfinished Investigation: What New Jersey Businesses Should Do Next
When facing public allegations of wrongdoing, companies should not let the speed of the public conversation dictate the speed of an investigation. An investigation designed to confirm a preferred narrative rather than establish the facts can create serious problems later, particularly if litigation, regulatory scrutiny, or employment claims follow. Key Takeaways When public allegations surface […]
Author: Sean M. Pena
BESS Interconnection: Managing Grid, Cost, and Schedule Risk
For battery energy storage system (BESS) developers, securing equipment and site control is only part of the development equation. A project must also connect to the electric grid, and increasingly, BESS interconnection is one of the biggest sources of schedule, cost, and contractual risk. Key Takeaways This article is Part 3 of our Battery Storage […]
Author: Nicholas Wall
Navigating Director and Officer Liability in Times of Financial Distress
Director and officer liability increases sharply when a company is in financial distress. Decisions that would draw little attention in a healthy business can later be challenged by creditors, shareholders, bankruptcy trustees, and regulators as breaches of fiduciary duty, fraudulent transfers, or oversight failures. Understanding where that exposure comes from, and how to manage it, […]
Author: Michael Mietlicki
Before You Buy: Managing Real Estate and Permitting Risk for BESS Projects in New York and New Jersey
For developers pursuing battery energy storage system (BESS) projects, finding the right property is only the beginning. BESS site selection is as much a legal and transactional exercise as a real estate decision, with risk analysis central to the project’s ultimate success. Key Takeaways The core questions for BESS site selection in New York and […]
Author: Nicholas Wall
What Business Owners Get Wrong Before Meeting a Litigation Attorney
What should you expect when meeting a litigation attorney about a business dispute? You should expect to describe the dispute in your own words, hand over the most important documents, flag any deadlines or immediate threats, and leave with a clearer picture of the problem, what information is still needed, and the likely next steps. […]
Author: Michael Mietlicki
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.