There was an interesting settlement to an estate tax dispute that was reached recently involving a work of art that cannot be sold.
The work in question, a sculptural combine called “Canyon,” features a bald eagle that had been stuffed by a taxidermist. It is theoretically very valuable because it is the work of Robert Rauschenberg.
However, eagles are a protected species. To prevent people from thinning out the species even further by killing eagles for sale protections were put into place years ago.
As a result of this the sculptural combine can’t be sold.
The children of the renowned art dealer Ileana Sonnabend inherited “Canyon” along with a veritable treasure trove of additional valuable works of art back in 2007. They paid state and federal estate taxes on their inheritances and it was no small sum.
The heirs to the Ileana Sonnabend estate shelled out some $471 million to pay these taxes.
In spite of this they were targeted by the Internal Revenue Service because they did not include the value of “Canyon.” They didn’t think that it should be taxable because it cannot be sold, and therefore it has no monetary value in a very real sense.
The IRS thought otherwise and demanded a total of approximately $40 million in additional taxes and penalties.
In the end a settlement was reached and the heirs to the estate will not be paying these additional millions. The work has been donated to the New York Museum of Modern Art to comply with the terms of this agreement.
The Potter Law Firm is an estate planning and elder law firm with offices in Ashland, Kentucky; northern Kentucky; and the Ballantyne area of Charlotte, NC.
John’s practice focuses on the use of Wills and Living Trusts in Estate Planning to help individuals protect their families and preserve their legacies after their deaths, but his practice also focuses on the critical issues of protecting individuals with dementia or other diminished capacity, assisting individuals in qualifying for Medicaid and other government benefits to offset the costs of long-term care, and providing special needs planning.
John is admitted to practice law in North Carolina, South Carolina, Kentucky, and Ohio, and he is accredited by the Department of Veterans Affairs.
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