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Home » Estate Planning » Work of Art Donated to Museum to Settle Estate Tax Case

Work of Art Donated to Museum to Settle Estate Tax Case

February 11, 2013 by John Potter

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.

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Filed Under: Estate Planning, Taxes Tagged With: Estate Planning, Estate Tax, Inheritance Planning

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Overall The Potter Firm was very professional. They took what could of been a very complicated process and were able to break it down so it was a lot easier to understand. We are confident we now have made the right decisions in our estate planning. Good firm to work with.

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John Potter has been a real pleasure to work with. He is very knowledgeable and explains things in a very simplistic manner so the average person can understand how/why the laws are written. He is very attentive and asks questions in such a way that not only helps him understand your goals, but also helps you think about what type of goals and expectations you should be considering. Exemplary client service.

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My husband and I selected Ms. Potter to assist with our small business. She responsive and attentive every time I have a question or need assistance, and is extremely knowledgeable and able to answer any legal question I have had. I know I can count on Ms. Potter for all of my business legal needs and I would highly recommend her to anyone needing legal assistance with such.

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