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Katya Sverdlov Blog

Monday, October 12, 2015

Estate Tax Implications for Fractional Art Ownership

In the past, the IRS has denied valuation discounts for fractional undivided interests in the work of art. As a result, shared ownership in a painting was not entitled to a tax discount during estate value calculation.

In a recent case, Estate of Elkins v. C.I.R. 140 TC 86 (2013), 764 F.3d 443 (5th Cir. 2014), a Tax Court and a Fifth Circuit Court of Appeals appear to consider express restrictions on sale and use. Unfortunately, no decision on the ultimate discount value was given. However, the law is likely to develop on this issue further.

As a result, art owners who are willing to relinquish a part of their ownership to children, grandchildren or other family members, may now use this discount method to achieve substantial estate tax savings.

The information in this blog was adopted from the following article

 https://news.artnet.com/market/estate-tax-on-inherited-art-collections-323840

Disclaimer: This article only offers general information.  Each situation is unique. It is always helpful to talk to a specialized attorney, to figure out your various options and ramifications of actions.  As every case has subtle differences, please do not use this article for legal advice. Only a signed engagement letter will create an attorney-client relationship.


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