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
Failing to Comply With NJ Rent Control Exemption May Prove Costly
What Developers Need to Know About New Jersey’s Rent Control Exemption Law to Ensure Entitlement to Exemption for Newly Constructed Multi-family Housing. A property owner in Jersey City is facing a $400 million federal class action lawsuit alleging that the landlord did not follow the procedural steps required to be eligible for exemption from local […]
Author: Patrick T. Conlon
Crypto Securities Law: When Tokens Become Investment Contracts
The application of traditional federal securities laws to crypto assets continues to evolve. In some cases, the Securities and Exchange Commission (SEC) considers tokens and other digital assets to be securities. This makes them subject to federal securities law, including the Securities Act of 1933 and the Securities Exchange Act of 1934. This classification has […]
Author: Bryce S. Robins
The Due Diligence Process for NY Condominiums and Cooperatives
While the New York City real estate market can be extremely competitive, moving too quickly often backfires. Before purchasing a condominium or cooperative in New York City, it is important to do you homework. Purchasing property in NYC can involve a dizzying number of legal issues. These include condo and co-op rules, rent restrictions, and […]
Author: Jesse M. Dimitro
Smart Contract Legal Issues: Drafting Agreements for Blockchain
Smart contracts feature a unique blend of legal agreement and technical code. This innovation has the potential to reshape how business is conducted. At the same time, smart contract legal issues around enforceability, jurisdiction, identity, and compliance are common. The legal framework for these self-executing agreements is still evolving. What Are Smart Contracts? Smart contracts, […]
Author: Bryce S. Robins
Are Stay Interviews the Key to Retaining Top Talent?
Retaining top talent continues to be one of the greatest challenges facing employers today. Even in an employer’s market, the loss of a key employee can disrupt operations and result in significant costs. While compensation plays a role, long-term retention often depends on workplace culture, communication, and employee engagement. One increasingly popular strategy for improving […]
Author: Angela A. Turiano
Why Secured Transactions Are Important
Secured transactions form the backbone of a wide range of business dealings, including business loans, mortgages, and inventory financing. Because the stakes are often high and relatively minor oversights can have drastic consequences, lenders and borrowers should thoroughly understand how to form an enforceable security agreement that protects their legal rights. What Is a Secured […]
Author: Dan Brecher
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.