Comments on: Don’t “possess” it or “sell” it — but do pay $29 million in taxes on it

By: gitarcarver

gitarcarver — Wed, 25 Jul 2012 17:53:31 +0000

Did anyone but me notice that the evaluation of the piece went up after the family decided to fight the IRS on this?

Mr. Lerner said that the I.R.S.’s handling of the work has been confusing. Last fall, the agency sent the family an unsigned draft report that it was valuing “Canyon” at $15 million. After Mr. Lerner replied that the children were refusing to pay, the I.R.S. then sent a formal Notice of Deficiency in October saying it had increased the valuation to $65 million.

Source: NY Times article.

I could be reaching or putting on a tin foil hat, but this seems to be another case where the government increased the penalties in retaliation for someone speaking out and fighting the government.

By: Death is a Taxable Event

Death is a Taxable Event — Wed, 25 Jul 2012 13:57:10 +0000

Donation wouldn’t work even if the the heirs were allowed to use the IRS value and were allowed to transfer the piece. They would still owe the $29.2 million in estate taxes and the $11 million in penalties now. They would each get a share of the $65 million as an income tax deduction, but would be limited to taking only 50% of AGI as a deduction each year.

And the estate tax rates are higher than the income tax rates, so even if they could get a current deduction they’d be out the difference in the rates.

By: doug

doug — Tue, 24 Jul 2012 23:07:19 +0000

tell the govt to come and get the eagle and then destroy the rest of it.

By: LisaMarie

LisaMarie — Tue, 24 Jul 2012 23:00:08 +0000

The first thing I thought was donation, too. But the NYT story I read said that since the heirs are claiming the work has a value of $0, they cannot donate it and claim it has worth for a tax writeoff.

By: Death is a Taxable Event

Death is a Taxable Event — Tue, 24 Jul 2012 19:00:35 +0000

The typical test of value for the estate tax is a willing buyer and willing seller in an arm-length transaction with neither party being compelled to sell or buy.

The IRS is totally wrong in their position and I’d wager that the tax court will side with the taxpayer.

But in estate and gift tax audits and examinations lately I’ve found the IRS to be taking more and more unreasonable positions in an attempt to raise revenue.

It’d be good for business if this is a trend.

By: NickM

NickM — Tue, 24 Jul 2012 18:44:27 +0000

What they should really do is to contact the Smithsonian. I’m confident that this piece wold be accepted into the collection. All problems go away at that point.

By: Dwight Brown

Dwight Brown — Tue, 24 Jul 2012 14:44:47 +0000

I’m not a tax lawyer. (Actually, I’m not a lawyer of any kind.)

But: the NYT article seems to imply that the mere possession of the art may be illegal, and that everyone’s pretty much just looked the other way for years.

If the family let Fish and Wildlife seize the art, as a violation of whatever law covers the possession of stuffed bald eagles, could they then take a tax deduction for the IRS valuation of the seized artwork as a loss?

By: Scott

Scott — Tue, 24 Jul 2012 13:03:32 +0000

@boblipton It would be illegal for them to give it. They’d have to have the IRS take or seize and then call the FBI.

This good property crime. Something that on the black market has value but when appraised has no value.

By: Hugo S. Cunningham

Hugo S. Cunningham — Tue, 24 Jul 2012 12:42:17 +0000

Can those being assessed the tax demand full settlement by surrendering the piece in question to the IRS? If not, the law needs to be changed, or overturned on Constitional grounds.

By: spo

spo — Tue, 24 Jul 2012 12:32:02 +0000

There is so much petty tyranny in this country.