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Former NBA Team Owner's Estate Challenges IRS on $1.9 Billion in Estate, Gift Tax Dispute
Author: James F. McDonough
Date: June 27, 2013
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The estate of the former Detroit Pistons’ owner Bill Davidson is challenging the Internal Revenue Service over what could be one of the largest and most substantial estate tax law cases heard in recent years.
Representatives for the late Davidson filed a suit in the U.S. Tax Court in Washington, D.C., arguing that the IRS wrongly claimed roughly $2 billion in underpayments of estate and gift taxes, penalties, and interest. However, the true amount the IRS may go after might reach as high as $2.8 billion, although the estate may not be required to pay more than $2 billion, the Detroit Free Press reports.
The issue surrounding Davidson’s estate and gift taxes revolves around several transactions and transfers he made to children and grandchildren prior to his death in 2009. Davidson, who owned several sports franchises during his life, established trusts worth tens of millions of dollars for each of his survivors. However, the IRS claims that the accountants managing the transactions undervalued privately held Guardian stock placed in those trusts by as much as $1,500 per share, the Free Press reports. In addition, the value of other key assets is also being debated by the IRS and Davidson’s estate, the representatives of which argue that the federal agency is overvaluing certain assets.
The IRS is also scrutinizing gifts Davidson made, many of which date back into the mid-2000s, arguing that he failed to pay the correct amount of taxes on sizable sums. The news source reports that the total value of these gifts may amount to more than $900 million.
Bill Davidson ranked No. 62 on Forbes’ list of richest men in the U.S. in 2008, during which time his net worth was estimated to be $5.5 billion. Representatives of his estate argue that he owes nothing more to the IRS than what was already paid out in estate taxes.
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Former NBA Team Owner's Estate Challenges IRS on $1.9 Billion in Estate, Gift Tax Dispute
Author: James F. McDonough
The estate of the former Detroit Pistons’ owner Bill Davidson is challenging the Internal Revenue Service over what could be one of the largest and most substantial estate tax law cases heard in recent years.
Representatives for the late Davidson filed a suit in the U.S. Tax Court in Washington, D.C., arguing that the IRS wrongly claimed roughly $2 billion in underpayments of estate and gift taxes, penalties, and interest. However, the true amount the IRS may go after might reach as high as $2.8 billion, although the estate may not be required to pay more than $2 billion, the Detroit Free Press reports.
The issue surrounding Davidson’s estate and gift taxes revolves around several transactions and transfers he made to children and grandchildren prior to his death in 2009. Davidson, who owned several sports franchises during his life, established trusts worth tens of millions of dollars for each of his survivors. However, the IRS claims that the accountants managing the transactions undervalued privately held Guardian stock placed in those trusts by as much as $1,500 per share, the Free Press reports. In addition, the value of other key assets is also being debated by the IRS and Davidson’s estate, the representatives of which argue that the federal agency is overvaluing certain assets.
The IRS is also scrutinizing gifts Davidson made, many of which date back into the mid-2000s, arguing that he failed to pay the correct amount of taxes on sizable sums. The news source reports that the total value of these gifts may amount to more than $900 million.
Bill Davidson ranked No. 62 on Forbes’ list of richest men in the U.S. in 2008, during which time his net worth was estimated to be $5.5 billion. Representatives of his estate argue that he owes nothing more to the IRS than what was already paid out in estate taxes.