Valuation Overturned

The U.S. Tax Court has redetermined for estate tax purposes the value of a deceased individual’s two 17th Century “Old Master” paintings. The court rejected the estate’s valuation because it determined that its expert witness stood to gain from providing a lowball estimate, didn’t offer supporting comparables for the valuations, exaggerated the paintings’ dirty condition, and didn’t adequately explain the fact that one painting sold a few years later for almost five times the amount he’d estimated. (TC Memo 2017-40)