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Should You Ask the Cost of a Gift?

Capital Gains tax

Imagine this scenario:

Your wealthy Uncle John is something of an art collector, buying paintings and sculptures from promising young artists.  When he retires, he moves into a small condo in a retirement community and has to downsize his art collection.  he gives away much of his art to family members, and you receive an abstract painting.  He tells you that he paid $5,000 for it only two years ago.

A few years later Uncle John passes away, and soon after that you decide to sell the painting.  You’re delighted when an art dealer offers you $12,000 for the painting.

Unfortunately the IRS audits your tax return for that year and informs you that you owe capital gains tax on the sale. Sound familiar? We can help.

For assistance with this or other tax or accounting matters please contact us at 201-947-8081 or 646-688-2807, or email us at info@bergencountycpa.com.

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