Posted on 10/06/2023 4:41:37 PM PDT by nickcarraway
Leon Black used a loophole in tax law and the help of Jeffrey Epstein to avoid capital gains taxes on a major art deal in 2016, according to a new report from The New York Times.
The Times report says documents it reviewed show the art collector and asset management mogul sold the Alberto Giacometti sculpture Figure Moyenne II for $25 million on November 23, 2016 to a trust controlled by Epstein. A company linked to Black allegedly then used the proceeds of that sale to buy the Paul Cézanne watercolor painting Portrait de Vallier de Profil.
The co-founder of the private equity company Apollo Global Management was able to defer the payment of capital gains taxes on the sale of his major art asset through an incentive “intended mainly to encourage new construction by real estate developers” but used by private art collectors to buy new works of equal or greater value until a change in tax law in 2017.
The Times report notes that the sale happened after Epstein had become a registered sex offender and the documents it reviewed showed the kinds of tax and estate advisory work provided before his arrest on federal charges in July 2019. Black paid $158 million to Epstein for estate and advisory services, including this art deal involving the Giacometti statue and the Cézanne painting, between 2013 and 2017.
The same tax loophole was used by one of Black’s art companies to sell the Georges Braque oil painting Le Guéridon for $5 million to the trust controlled by Epstein. According to the Times, Black used the proceeds to buy a second Cézanne painting unnamed in the report.
The publication of the Times report on this art deal involving Black and Epstein comes several months into the Senate Finance Committee’s investigation into those services as well as “trusts and structures Black executed to avoid over $1 billion in future gift and estate taxes”. In July, Senator Ron Wyden of Oregon, the committee’s Democratic chair, noted that Epstein was paid $158 million in “inexplicably large” fees despite not being a licensed tax attorney or a certified public accountant. Wyden also noted the amounts were “well in excess of what Black paid any other financial advisors and far higher than the median compensation of Fortune 500 CEOs at the time.”
It is unclear what happened to Figure Moyenne II and Le Guéridon after they were purchased by the trust controlled by Epstein. However, online records show Christie’s sold Le Guéridon for $10.1 million on May 15, 2017, noting the painting was the “property of an important private collector” and came with a minimum price guarantee. Sotheby’s sold a version of Giacometti’s Figure Moyenne II on June 21, 2017 at auction in London for £17.9 million (about $21 million).
but used by private art collectors to buy new works of equal or greater value until a change in tax law in 2017.
A GRAT is an irrevocable trust to which the donor conveys property and that provides for a term of annuity payments from the trust to the donor," Sitkoff explained.To oversimplify a complex evasion mechanism from which few readers are likely to benefit, an individual can create a trust and receive payments from it for a given amount of time, after which the remaining contents of the trust go to the assigned beneficiary. Such gifts would usually be taxed under the aptly named gift tax, but under a GRAT the fiscal liability becomes more complicated.
The gift tax is applied upon the creation of the GRAT, but is calculated under the erroneous assumption that the property within it will increase in value at the (now historically low) federally established rate — even if it turns out to do so at a substantially higher pace — and is not applied to the sum of annuity payments taken out of the trust. Combine that underestimated future value with exempt annuity payments, and you have what on paper seems like a small or inexistent gift, liable to little taxation, even as you transfer substantial wealth to a second party.
Source: The Harvard Crimson
Who is leaking this ? And why ?
Art deals from Hunter Biden?
So what. Many people use legitimate tax loopholes to reduce their tax burden.
This was not illegal.
“This was not illegal.”
Maybe it is and maybe it isn’t. But it sure as hell is an illustration of everything that’s wrong with not just the tax code but the government that comes up with this BS.
L
As long as its overcomplicated, there will be loopholes because there is no one who knows everything about the tax code. It changes too frequently and its also too massive.
I am for everyone being able to lower their tax burden. Government pisses away money on illegals and alphabet people and women/minority demos they want to pamper, and rewrding contracts to friends,
While not doing things like securing the border and dealing effectively with actual criminals plagueing society.
Whose helping Hunter Biden avoid paying taxes on the sale of his paintings?
Who and what army are going to make him pay taxes?
Art collector and business mogul.
Is that what he puts on his taxes? I dont even come close to this level of crime and its tied into Epstein.
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