Art and collectables might not be subject to Section 1031 like kind exchanges anymore if the White House gets its was in its new budget proposal. The administration seeks to have tax exempt status taken away and have any gain from an exchange taxed immediately. This article asserts that the change would penalize American art dealers compared to their international counterparts who operate under more favorable rules. In addition, there is merely tax deferral status in allowing art based like kind exchanges, rather than any tax exemption or avoidance, since the piece will eventually be sold and have its gain taxed. This is an issue worthy of keeping an eye on for some clients as it moves its way through the budget process.
See Diana Wierbicki, The President’s Attack on Like-Kind Exchanges, Wealth Management, May 6, 2015.
Special thanks to Jim Hillhouse for bringing this article to my attention.
