Bay Area Estate And Tax Planning Law Firm

IRS challenged by late billionaire’s estate

On Behalf of | Jul 3, 2013 | Uncategorized |

Billions of dollars are at stake in a recently filed petition which claims that the IRS overvalued certain assets that belonged to late billionaire and former NBA team owner Bill Davidson. The petition, filed on behalf of Davidson’s estate, alleges that the deficiency notice handed down by the IRS does not reflect the staggering loss in value that his stock holdings took at the time of the billionaire’s death. The litigation will go to the U.S. Tax Court and its outcome could hold the key to how similar cases are handled here in California.

An amount totaling millions of dollars given by Davidson to his wife is another issue in the dispute. The money was provided to help his wife’s daughter build a home. The IRS claims that some of the funds Davidson provided to family members should have been considered as taxable gifts.

The IRS has declined to comment and is seeking to recover a deficiency in the amount of $2 billion and upwards in the form of estate taxes. The agency has determined that the total combined value of the estate’s taxable assets is $4.6 billion and has calculated the penalties and tax due at $1.9 billion. The actual value of the stock in Davidson’s company, Guardian Industries, is a key issue on the dispute.

The IRS’ deficiency notice may have included double-counting because the agency can’t include additional items later. The IRS, on the other hand, is apparently not comfortable with the manner in which the deceased billionaire’s accountants valued the privately-held stocks that were placed in family members’ trust accounts. The case will no doubt be closely watched by taxation experts here in California and elsewhere across the United States who will soon be handling similar litigations.

Source: Crain’s Detroit Business, “Davidson estate in billion-dollar tax dispute with IRS,” June 21, 2013