Court Rejects Valuation of Painting That Was Only 20% of What Painting Sold for 3 ½ Years Later

The IRS and the taxpayer in the case of Estate of Kollsman v. Commissioner, TC Memo 2017-40 had wildly different values that each ascribed to two paintings.  In the view of the estate the paintings in question were valued at $500,000 and $100,000 respectively.  But the IRS position was that the paintings were far more valuable, arguing at trial that the proper values were $2,100,000 and $500,000 respectively.

One reason the IRS was skeptical of the estate’s value was the that the more valuable of the two paintings was sold 3 ½ years later for a $2,100,000 hammer price and a full price paid by the buyer of $2,434,500, well above the estimated $500,000 value.

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Mere Fact Land Would Be More Valuable if Sold Along With Tracts Owned By Other Party Does Not Mean Assumption of Combination is to Be Made to Value Estate Property

In the case of the Estate of John A. Pulling, Sr v. Commissioner, TC Memo 2015-134, the Tax Court was asked to decide the highest and best use of three parcels of land held by an estate.  While disagreeing with the estate’s initial argument that Florida case law controlled the proper valuation of the parcels, the Court eventually accepted the estate’s values on different grounds.

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