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
Understanding Portability for Estate and Gift Tax
Portability of estate and gift tax enables a surviving spouse to inherit any unused portion of their deceased spouse’s federal estate and gift tax exemption. So, if one spouse doesn’t utilize their full exemption, the surviving spouse can effectively double their exemption amount with regard to estate tax liability. For married couples, portability offers a […]
Author: Marc J. Comer
Pet Trusts in New Jersey and New York: A Practical Estate Planning Tool
For many of us, pets are more than companions—they are members of the family. Yet they are often overlooked or inadequately provided for when it comes to estate planning. A pet trust offers a legally enforceable way to ensure that your animal continues to receive proper care if you become incapacitated or pass away. As […]
Author: Marc J. Comer
How Can Trusts Be Used in Business Succession?
For many New Jersey business owners, a closely held company represents decades of work, financial investment, and personal sacrifice. Trusts in business succession planning are one of the most effective tools for protecting that value, allowing founders to control how and when the business passes to the next generation while reducing the risk of disputes, […]
Author: George McGowan
Read Before You Sign: IT Contract Pitfalls Every NJ Business Should Know
In today’s digital economy, New Jersey businesses of all sizes rely heavily on technology vendors, software providers, cloud platforms, and managed IT services. Whether your company is purchasing software, migrating data to the cloud, engaging a cybersecurity consultant, or entering into a long-term managed services agreement, a careful IT contract review can have significant operational, […]
Author: George McGowan
New York NDA Requirements for Businesses
Non-disclosure agreements (NDAs) remain a critical tool for protecting sensitive business information. However, New York NDA requirements have evolved, and businesses must ensure these agreements are carefully drafted to remain enforceable. In a competitive market like New York City, NDAs are commonly used to protect proprietary information, client relationships, and strategic plans. At the same […]
Author: Dan Brecher
New Jersey Will Contest Grounds Explained
How Courts Evaluate Testamentary Capacity and Undue Influence Will contests in New Jersey are difficult to win, given the strong presumption that a properly executed will reflects the testator’s intent. However, challenges based on lack of testamentary capacity and undue influence remain common, particularly where there are concerns about mental capacity or the involvement of […]
Author: Marc J. Comer
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.