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‘You Snooze, You Lose,’ Billionaire Tells IRS. Media mogul Sumner Redstone is challenging a $1.1 million gift tax bill that the Internal Revenue Service issued more than 40 years after the transaction at issue. In the late 1960s, Redstone and his brother, Edward, received shares in the family’s movie-theater business from their father, Mickey. To settle a bitter legal fight with Edward, Sumner and Mickey Redstone agreed in 1972 that one-third of the shares that each brother had received were meant to be held in trust for Mickey Redstone’s grandchildren. Sumner Redstone then conveyed part of his shares to a trust for his own son and daughter. A recently filed Tax Court petition contends that the IRS was immediately aware of the settlement yet never claimed that Redstone made a taxable gift in 1972. Now, the petition states, the IRS has assessed more than $700,000 in gift taxes along with fraud penalties and interest, for a total of $1.1 million. With the other settlement participants deceased and many records no longer available, the IRS waited too long to bring its claim, Redstone argues - though ordinarily, the statute of limitations does not expire for years in which no gift tax return is filed. Sumner Redstone v. Commissioner, No. 8097-13.

Estate’s Share Of Art Collection Gets 10 Percent Discount. The heirs of a wealthy Texas couple are entitled to a 10 percent estate tax valuation discount on the family’s prized art collection, the Tax Court ruled. James A. Elkins Jr. owned, together with his children, a fractional interest in more than 60 pieces of contemporary art by artists including Jackson Pollock, Paul Cezanne, Pablo Picasso and Jasper Johns. Most of the works were subject to an agreement that stipulated that all of the co-owners must consent to any sale, and that also spelled out each co-owner’s right to possess the artwork. After the father died in 2006, the estate valued his share of the art at a discount of more than 40 percent because of the restrictions on sale of his interest, and the limited market for fractional shares of art. The IRS said no discount was appropriate. Tax Court Judge James Halpern ruled that the restrictions of sale are disregarded under Section 2703 of the tax code, but that the family is still entitled to a 10 percent discount because any buyer of James Elkins’ fractional interests would have to consider the cost of legal proceedings to partition the ownership and sell the fractional shares. Estate of James A. Elkins Jr. v. Commissioner, 140 T.C. No. 5.