Discounts for Fractional Ownership of Real Property are Accepted, so Why Haven’t the IRS and Courts Accepted Discounts for Fractional Ownership of Artwork?

Authors

Maren N. Eisenmesser

Abstract

In 2014, the Fifth Circuit held that Mr. Elkins’s estate was entitled to apply a fractional ownership discount to determine the taxable value of the undivided interest in artwork. The estate received a $14 million refund plus interest. The Internal Revenue Code directs taxpayers to value the items in a gross estate at their fair market value. Fractional ownership adds another problem in the valuation of an estate’s interest property. In general, courts have accepted fractional ownership discounts for real property. In contrast, courts have been reluctant to apply a fractional ownership discount for artwork. This Note will argue that fractional ownership discounts should be applicable in artwork.

Recommended Citation

Maren N. Eisenmesser, Discounts for Fractional Ownership of Real Property are Accepted, so Why Haven’t the IRS and Courts Accepted Discounts for Fractional Ownership of Artwork?, 14 Brook. J. Corp. Fin. & Com. L. (2020).
Available at: https://brooklynworks.brooklaw.edu/bjcfcl/vol14/iss1/8