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Sunday, September 24, 2006

NY Times: Astor Painting Had Basis of $172k, Not $7.4m Reported on Return

Interesting article in the Sunday New York Times:  Major Error Is Reported in Tax Paid by Mrs. Astor on Sale of Painting, by Serge F. Kovaleski:

Legal papers filed by J. P. Morgan Chase, the temporary guardian of Brooke Astor’s assets, state that her son recently told the bank that he now realizes he made an error in his mother’s 2002 tax return by overstating the original price of a Childe Hassam painting she had sold, resulting in a large underpayment of taxes three years ago....

The so-called cost basis for the work of art, “Flags, Fifth Avenue,” was listed in Mrs. Astor’s federal income tax filing as $7.425 million, a copy of the document shows. But she paid $172,010 for the painting when she bought it in March 1970, according to the bill of sale. Because of the inflated figure, Mrs. Astor apparently ended up paying far less in taxes than required on the capital gains she realized from the February 2002 sale of the painting by Hassam, a renowned American Impressionist. Mrs. Astor’s son, Anthony D. Marshall, 82, who managed her finances at the time, sold the painting to an art gallery for $10 million and collected a $2 million fee from his mother for handling the transaction.

http://taxprof.typepad.com/taxprof_blog/2006/09/ny_times_astor_.html

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