IRS Attacks on Art Donations: Old Techniques, New Hurdles



If people have learned anything from the recent disputes over conservation easement donations, it is that IRS has a playbook. It involves announcing that the main problem is excessive valuation, followed by attacking essentially everything but what the donation is worth. The IRS often concludes that taxpayers should get a tax deduction of $0, and steep penalties apply.

The IRS has already experienced problems using this strategy in the easement context, and things might get harder if it plods ahead in the same manner when it comes to art donations. This article explains the general rules for donating artwork, recent IRS announcement about “promotions” of improper donation schemes, and hurdles that the IRS might encounter if it insists on applying the economic substance doctrine, alleging that art donations are worth $0, or badgering recipients of such donations.

Read the full article here.

About Hale E. Sheppard
HALE E. SHEPPARD, Esq. (B.S., M.A., J.D., LL.M., LL.M.T.) is a partner in the Tax Controversy Section of Chamberlain Hrdlicka.  He defends clients in tax audits, tax appeals, and Tax Court litigation, covering both domestic and international issues.

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