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The New Domestic “Freeports”: Sales and Use Tax Opportunities and Risks

Posted by Nicholas O'Donnell on October 27, 2015 at 6:20 AM

Recent news of “Freeports” opening in Delaware prompts a review of what these facilities are for, what they are not for, and where collectors and dealers can get themselves into trouble. When used carefully there are meaningful tax efficiency opportunities, but no one should think that they are or can be a one-stop way to avoid sales tax in particular. Thoughtful planning is the key.

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Topics: New Hampshire, Fritz Dietl, David Arendt, Delaware, Geneva, Oregon, Luxembourg, Pure of Love of Art Versus Mere Investment, Customs, Crozier Fine Arts, yco International Ltd., Sales & Use Taxes, Dennis Kozlowski, Delaware Freeport, Freeports, Alaska, Tax, Montana

Like-Kind Exchanges—Art and Collectibles’ Tax Deferral in the Crosshairs

Posted by Nicholas O'Donnell on April 29, 2015 at 7:56 AM

There has been considerable coverage in the last week about so-called “like-kind” exchanges of art, and federal tax. This has been driven by two factors: President Obama’s 2016 proposed budget, which would eliminate the tax deferral on these “1031 exchanges” for art and collectibles, and a recent New York Times article entitled “Tax Break Used by Investors in Flipping Art Faces Scrutiny.” The prospect of actual change is dubious, but there is no question that the prospect of the elimination of this tax deferral means anyone who is considering such an exchange for their art and collectible collection should be paying attention.

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Topics: 1031 Exchange, Jay Darby, Tax and Sports Update, Ernst & Young, New York Times, Like-Kind Exchange, Tax

Appellate Ruling Bolsters Role of Fractional Interests in Estate Planning

Posted by Nicholas O'Donnell on October 1, 2014 at 4:56 AM

The Fifth Circuit Court of Appeals has overturned a Tax Court decision in a ruling that has major implications for estate planning and works of art. While the central basis for the decision in favor of the Estate of James Elkins was the inexplicable failure by the IRS to rebut the taxpayer’s evidence, the decision nonetheless offers guidance for an important estate planning tool: fractional interests. Eileen Kinsella has also analyzed the case at Art Net (I’m quoted) here.

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Topics: estate tax, Estate of James Elkins, fractional interest, Eileen Kinsella, GRIT, Tax Court, 5th Circuit Court of Appeals, Court of Federal Claims, Estate Planning, ArtNet, Grantor Retained Income Trust, Tax, Elkins

“Canyon” Update—Rauschenberg’s Bald Eagle Collage Goes to MoMA, Tax Dispute Resolved

Posted by Nicholas O'Donnell on November 28, 2012 at 6:26 AM

As posted at the Art Law Report two weeks ago, a settlement of the IRS dispute over Robert Rauschenberg’s work “Canyon”—which incorporates a stuffed bald eagle, thus implicating criminal statutes prohibiting any sale or transfer of the national bird—has been announced publicly.

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Topics: Bald Eagle, Museum of Modern Art, 16 U.S.C. § 668, Ralph Lerner, 16 U.S.C. § 668a, Canyon, Robert Rauschenberg, IRS, 1940 Bald and Golden Eagle Protection Act, Tax, Ileana Sonnabend

Possible Settlement of IRS Dispute Over Rauschenberg's "Canyon"

Posted by Nicholas O'Donnell on November 13, 2012 at 10:50 AM

At Friday’s outstanding Art Law Day presented by the Appraisers Association of America, among the highlights were talks by Ralph Lerner and Judith Bresler, co-authors of the indispensable Art Law (just published in its fourth edition). As part of a panel on Philanthropy and the Law, Lerner gave a notable update on one of the biggest art law stories of the year, the Sonnabend heirs’ battle with the IRS over Robert Rauschenberg’s collage Canyon.

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Topics: Art Law Day, Ralph Lerner, IRS Art Advisory Panel, Canyon, Robert Rauschenberg, Events, Appraisers Association of America, 1918 Migratory Bird Act, 1940 Bald and Golden Eagle Protection Act, Tax, Ileana Sonnabend, Judith Bresler

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About the Blog

The Art Law Report provides timely updates and commentary on legal issues in the museum and visual arts communities. It is authored by Nicholas M. O'Donnell, partner in our Art & Museum Law Practice.

The material on this site is for general information only and is not legal advice. No liability is accepted for any loss or damage which may result from reliance on it. Always consult a qualified lawyer about a specific legal problem.

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