U.S. District Court Upholds IRS Penalties Against Estate for Promoting Abusive Art Donation Tax Shelter

The U.S. District Court for the Western District of Texas, Austin Division, held that the taxpayers’ estate was liable for penalties under IRC §6700 for promoting an abusive tax shelter involving art donations, granting summary judgment to the IRS. Taxpayer, the estate of a deceased individual who owned an art consulting business, facilitated tax deductions for clients by purchasing art, holding it for about a year, then donating it to claim deductions at inflated appraised values. The court found that the taxpayer made false statements to clients about when they acquired ownership of the art and the reliability of appraisals ...