Another tax break provision has been targeted by the Obama administration. The like-kind exchange provision allows tax deferral, and has become popular with art collectors who use it to buy high end art with the proceeds from sells of other artworks and defer the 28 percent capital gains tax that would apply. The proposal by the Obama administration would no longer allow the like-kind exchange provision to apply to art and collectables, and would limit the benefits of the provision when applied to real estate. An estimated $19.5 billion will be brought in as capital gains taxes over the next 10 years as a result of the proposed changes.
See Graham Bowley, Tax Break Used by Investors in Flipping Art Faces Scrutiny, New York Times, Apr. 26, 2015.
Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.
