Avoid Underreporting the Value of ArtAvoid Underreporting the Value of Art

Recently, in Estate of Kollsman v. Commissioner,¹ the U.S. Court of Appeals for the Ninth Circuit affirmed the Tax Court’s 2017 ruling that an art collector’s estate significantly underreported the value of two artworks for estate tax purposes. The appellate court found that the values reported by the estate were unpersuasive because the auction house specialist exaggerated the dirtiness of the paintings and failed to adjust his appraisals after one of the works sold at auction for approximately five times more than the reported value. The case shows that even the opinions of leading industry experts can be deemed unreliable when challenged in court, and those opinions may be subject to increased scrutiny by the Internal Revenue Service ...