Estate Contests 1.9 Billion Dollar Tax Bill
Nobody likes to get a big tax bill from the IRS but imagine getting a bill for almost 2 billion dollars! The Detroit Free Press reports that the estate of the late billionaire William Davidson is going to tax court to contest a 1.9 billion dollar assessment (that's Billion with a "B"!)
The assessment is based upon deficiencies which the IRS claims to be 2.8 billion dollars on an estate of about $5.5 billion. Davidson was the 62nd wealthiest man in the U.S. in 2009 with assets including, among other things, the Detroit Pistons Basketball team, the WNBA Detroit Shock and the Tampa Bay Lightning.
Under the current tax law, estates do not pay tax unless they exceed $5.25 million, a princely sum to most but a mere drop in the bucket here. Experts expect the coming protracted litigation to reveal the intricate tax-planning strategy which went into planning Davidson's estate. The key issue seems to be the IRS claim that Davidson's accountants grossly undervalued the stock in his privately held corporation while the estate claims that the stock was grossly overvalued by the IRS which they say failed to account for the anticipated effects of the economic crash of 2008.
Consider that estates of persons dying in 2009 paid a total of $13 billion when following this story. Also consider that in this nation which is starved for funds to provide the basic services and infrastructure we have all come to rely on, the recent upward revision of the amount of assets before an estate owes taxes to $5.25 million will very likely reduce this number substantially.