Estate’s Application of Fractional Ownership Discount Permitted by Fifth Circuit

James A. Elkins Jr. and his three children co-owned a collection of artwork made up of 64 pieces of various influential and famous artists, such as Pablo Picasso and Jackson Pollock. After Elkins died, his estate applied a fractional ownership discount to its tax calculations for the art collection. The IRS asserted that this discount was not allowed and the tax court applied a 10% discount instead.

In Estate of James A. Elkins, Jr. v. Commissioner, The Firth Circuit reversed the tax court, and found that Elkins’ estate was correct in calculating and applying the discount, which results in a refund of $14 million to Elkins’ estate.

See Roger Russell, Fifth Circuit Agrees With Estate’s Art Valuation, Awards $14 Million Refund, Accounting Today, Sept. 18, 2014.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.