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If the IRS determines that you gave them a misleading appraisal report, expect to pay. In Estate of Kollsman v. Commissioner, the Tax Court found that the evaluation used for the Estate’s taxes was off by $1.77 Million. What went wrong? The Estate expected a Sotheby’s auction house specialist would satisfy the IRS’s appraisal requirements. However, it was found that the expert’s valuations were “lowballed” in order to secure the future sale of the works.

Two Old Master Paintings

The Estate of Kollsman possessed two 17th Century Old Master paintings, one created by Pieter Brueghel the Younger and the other by either Jan Brueghel the Elder, Jan Brueghel the Younger, or a Brueghel studio. A Sotheby’s specialist examined the two paintings, evaluated them for $500,000 and $100,000 respectively, and offered to have Sotheby’s sell the works at auction. The executor then submitted the specialist’s appraisal with their estate tax reports.

To read more:

http://themagnussongroup.com/nws/paintings-undervalued-by-1-77-million-in-estate-tax-case

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AAD REPORTS   Reports, news and opinion from Art-Antiques-Design.com