Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Sunday, November 7, 2021

Tax Tactic Of The Ultra-Wealthy: Split The Masterpiece In Two

ArtBeautiful, timeless art pieces are not only a source of pride and joy for billionaires art lovers—they are also a great way to get a tax break. 

Lawyers for the ultra-wealthy say that "they're increasingly getting requests from art collectors to find strategies to shield their wealth from the Internal Revenue Service. The solution: giving away just a fraction of their ownership." 

With the use of fractional donations, the ultra-wealthy can get a tax benefit "tied to surging art values without donating a painting outright." Under this strategy, the art piece will go back and forth between the donor and the museum and the owner will receive an income-tax deduction "based on the fair market value. . ." 

According to John Mezzanotte, managing partner in the Greenwich, Connecticut, office of accounting and tax-advisory firm Marcum, "If you're dividing time between two places, you won't even miss the art."

Fractional donations of art pieces is another example of another creative strategy that the ultra-rich are using to obtain tax benefits and avoid the proposed tax levies on high earners. 

See Heather Perlberg, Tax Tactic Of The Ultra-Wealthy: Split The Masterpiece In Two, Financial Advisor Magazine, November 2, 2021. 

Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.


Estate Administration, Estate Planning - Generally, Income Tax | Permalink


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