Mar 27, 2015

Estate Wins Ruling vs. IRS on Art Collection

Rumor has it that estate attorneys all over America are gleefully dancing around their desks.

The reason for the lawyerly ruckus was that the Internal Revenue Service had just lost a case with major implications for the estates of collectors. At issue was whether an estate could parcel out an art collection according to the rules of “fractional ownership.” Fractional ownership is an accounting method whereby several individuals can share ownership of a tangible asset. While this case involves a multi-million-dollar art collection, the tenets of the can be applied to any collector who wishes to make arraignments for dispersing a collection after their death.

Generally, the asset involved in a fractional ownership situation is something like real estate, a yacht, a racehorse or other high-value property. Sharing ownership in an asset also involves sharing the expenses involved in keeping the item: insurance, maintenance, storage and such.

Fractional ownership is an accounting method whereby several individuals can share ownership of a tangible asset. A recent case ruling finds that collectors can use the rules regarding fractional ownership to an art collection for estate purposes will affect owners of collectors big and small.

Texans James and Margaret Elkins shared an interest in their art collection with their three children. Their collection of 64 works was impressive and included artworks by Picasso, Pollock, and sculptor Henry Moore. When Mrs. Elkins died, Mr. Elkins allowed a 27-percent share of 61 works to pass to his children plus a 50-percent share in the three works by Picasso, Pollock and Moore. Read More

Mar 26, 2015

Can Your Antiques Business Pass the Acid Test?

Back before Saturday Night Live there was a radio comedy troupe called The Firesign Theatre. Their routines included a game show titled “Beat the Reaper” in which contestants were injected with a deadly disease and had less than a minute to analyze their symptoms and guess what disease they had. Those who did would Beat the Reaper. Those who didn’t … well, you get the idea. I suppose the comedy was all in the presentation.

A common tension-building device used by fiction writers is to place the protagonist in a situation where catastrophe is imminent and time is running out: Our hero is short on air, ammunition, fuel, time, or some combination thereof. If I was in such a situation, I might find some comfort in knowing just how long I had left. When the end came, I would at least know what had happened.

I wish I could say that about my first business. When the end came, I offered a dazed look to the accountant and exclaimed “What happened?”

She gave me a look reserved for the young and ignorant and said simply: “Let me see your books.”

I handed her my check registers along with a list of assets and liabilities and a box of receipts, which represented the extent of my bookkeeping back in those days. She grimaced and said, “Get back to me in two weeks.” Read More