COURTHOUSE NEWS SERVICE – The renowned art collector Jane Holzer has sued Stephan Stoyanov and his gallery in New York state court for derailing an IRC 1031 “like-kind exchange” of four artworks. Holzer alleges that because Stoyanov bounced a check and failed to pay the third-party intermediary (Gagosian Gallery) for her two relinquished artworks within the statutory mandated time period, Stoyanov failed to take title to the exchanged artworks in time for Holzer to defer capital gains taxes on her relinquished artworks. To continue reading, click here.
ARIS Commentary: The Holzer v. Stoyanov case shows the importance of properly executing like-kind exchanges of fine art (ARIS news May 16, 2013) including the use of a qualified, independent “Qualified Intermediary” to manage the IRC-mandated functions (such as properly handle and account for escrowed funds) and a title insurer to certify the underlying clear legal title to the relinquished and the replacement property. Confirmed clear legal title to relinquished and replacement works is the final prerequisite to a valid, completed forward or reverse IRC 1031 like-kind art exchange.