[ad_1]
Curated by Daniel Xu and Melanie Cohen
If you find yourself with a significant tax bill, it might be worth considering the provenance of your fine art collection. Some tax administrations will accept their donation in lieu of cash to settle your debt.
In a tax case in Spain this year, an individual donated priceless fine art—including more than 200 Francisco de Goya engravings—to settle a multimillion-euro tax debt. The identity of the taxpayer-donor hasn’t been revealed, as Spain has robust privacy laws.
The tax angle gets even more interesting. The last known owner of the pieces, the Celaya Foundation, wasn’t subject to the tax for which the debt was paid. The tax debtor must have taken ownership of the pieces from the foundation to then transfer them to the treasury. The mechanics of how those transactions transpired also hasn’t been revealed.
Such a method of tax debt payment—a payment in kind—isn’t common. It requires careful appraisal of the value of the underlying assets being transferred and is subject to the fluctuations in the underlying market. In this case, a 2018 valuation of the collection put the total at 2.3 million euros ($2.5 million), but it was raised to 4.3 million euros in November 2019.
It’s unclear whether additional pieces were added to the collection in the interim, but the appraised price of a de Goya today may not be the appraised price on the settlement date. If faced with a similar conundrum, you might prefer to keep the piece and pay your debt in cash.
On the plus side, the Provincial Council of Álava now holds the pieces and can place them on display for the enjoyment of all.
Next time you’re faced with a daunting tax debt, you might want to think carefully about dusting off one of those old masters hanging in your back bedroom.
The Exchange—It’s where great ideas on tax and accounting intersect.
—Andrew Leahey
Look for Leahey’s column on Bloomberg Tax, and follow him on Mastodon at @andrew@esq.social
Insights
Katten’s Charlotte Sallabank and Christy Wilson examine the OECD’s latest Pillar Two guidance, noting documents provide more details and clarify unique situations.
Gibson Dunn’s Michael Desmond and Nicole Butze analyze the impact of the Supreme Court’s Loper Bright ruling, saying that challenges to unfavorable tax regulations are expected to grow.
Arnold Bloch Leibler’s Shaun Cartoon analyzes PepsiCo’s successful appeal on Australia’s royalty tax, finding the ruling is unlikely to deter the Australian Taxation Office from scrutinizing multinationals.
Baker McKenzie’s Imke Gerdes, Clarissa Giannetti Machado, and Carlos Linares-Garcia examine transfer pricing in Brazil, saying that overlooking details of the new rules opens the door to tax controversy.
New Practice Lab’s Ayushi Roy says the Direct File program has big potential, noting that the agency should make some product management practices permanent.
Columnist Corner
The IRS should audit 100% of the top 1% of income earners and set progressively lower audit rates for lower brackets to optimize resources and maximize compliance, Andrew Leahey says in his latest Technically Speaking column.
“Focusing audit efforts on those with the highest potential for avoidance will help the IRS better deter tax evasion among those who could gain the most from it.” Andrew argues, adding that specific audit coverage thresholds would be more effective than broad mandates.
Career Moves
Lucas Love has joined Carlsmith Ball as of counsel in its Honolulu office.
Justin Campolieta has joined Jones Day as a partner in the tax group in New York
Larry Kern has joined Holland & Knight as a partner in the private wealth services group in Chicago.
Juan Vasquez Jr., David Calvillo, Stuart Clements, Peter Lowy, and David Medina have joined Nelson Mullins as tax partners in Houston.
If you’re changing jobs or being promoted, email your submission to TaxMoves@bloombergindustry.com for consideration.
News Roundup
It’s been another busy week in tax news from state capitals to Washington. Here are some stories you might have missed from our Bloomberg Tax news team.
OECD Reports Progress, But No Deal Yet on Global Tax Treaty
An agreement on a global tax treaty remains elusive, as negotiators continue to work on ironing out differences over several issues, including a framework to simplify intercompany transactions. Read More
BDO Pares Back Clients, Reforms Audit Practice to Boost Quality
BDO USA P.C. has launched a multiyear shake-up of its audit practice in a bid to repair a track record that lags its peers and bolster the performance of its audit teams. Read More
Mansion Taxes Off the Table in Massachusetts Housing-Aid Bills
Massachusetts cities won’t be able to impose extra taxes on high-priced real estate sales as localities in Connecticut, New York, and elsewhere do, after state lawmakers rejected Gov. Maura Healey’s proposal for such levies. Read More
West Virginia to Cut Taxes More After Hitting Revenue Target
West Virginia’s personal income taxes are set for further reduction after the state met its revenue collection targets for fiscal 2024, triggering provisions of a 2023 law that permits such cuts. Read More
Tax Journals
Tax Management International Journal
Governments worldwide are taking steps to address forced labor in the supply chain, BDO USA’s Damon V. Pike says.
Before the end of 2024, US groups operating in the Netherlands should conduct an impact assessment of the new Dutch entity tax classification regulations, Loyens & Loeff’s Anastasia Daane and Jonneke Dijkstra say.
MNE groups with a presence in Cyprus should review their existing or planned transfer pricing arrangements to ensure they are aligned with the new regulations to avoid penalties and additional taxes, STI Taxand’s Christos A. Theophilou says.
Stay Connected
Get our newsletter each week by heading over to The Exchange and clicking the blue “Free Newsletter Signup” box at the top. Join our LinkedIn group where our authors, contributors, and readers can share tax-related stories and exchange ideas.
[ad_2]
Source link
Other Articles
