New Ruling on Estate Taxes on Inherited Collections
This essay is about fractional interests in visual art. For a long time the Internal Revenue Service position has been that fractional interests in tangible personal property such as visual art (ownership in, say, a painting, divided between several people, often family members) are not entitled to reduced gift or estate tax valuations. Recently, the US Tax Court and the Fifth Circuit Court of Appeals decided that the IRS position was wrong, and a fractional ownership interest in visual art is, indeed, entitled to a reduced valuation. This opens interesting planning options for art owners who can bring themselves to give up part ownership of their art.
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