As I have previously discussed, the Fifth Circuit in Elkins v. Commissioner reversed the Tax Court’s reduction of the estate’s discounted value of artwork to 10 percent compared to the estate’s expert’s opinion that the value should be discounted between 52 and 80 percent. The resulting $14 million refund that the estate received was seen as a huge victory for art collectors. However, the case’s factual circumstances may limit the beneficial affect this ruling may have on future collectors. The reasoning for the reversal of the Tax Court was based on the IRS failing to meet the burden of proof, as the IRS insisted that no discount should be allowed and did not present evidence of what the proper discount should have been to rebut the estate’s expert. This strategy is unlikely to be repeated by the IRS in future cases.
See Michael S. Fischer, Estate Tax A Boon For Art Collectors, Private Wealth, Nov. 7, 2014.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.
