Tax & Sports Update

The Gift That Keeps on Giving - To the IRS

Posted by Joseph B. Darby III on Mar 17, 2017 7:48:35 AM

GettyImages-508893778.jpgA rather stunning near–catastrophe almost occurred in the art world recently, and only dumb luck – namely, a casual off-hand remark with a savvy tax adviser  saved the art owner from a huge, self-inflicted tax bill from the Internal Revenue Service. A non-U.S. taxpayer (meaning a non-resident alien in tax parlance) had an extremely valuable painting being displayed in a U.S. museum or gallery and, for a variety of reasons, he wanted to transfer the painting to his spouse, who is also a non-resident alien. Let’s assume for the sake of argument that the painting was worth $50 million. Because the gift was from a non-resident alien to his non-citizen spouse, and the property was tangible property located or situated within the United States at the time of the transfer, this transfer would have been subject to tax the U.S. gift tax regime, at a tax rate of up to 40%. WHAAAAATTTTT???!!!

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Topics: estate tax, IRS, Tax, transfer tax

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