Solow's Art Sale Highlights Foundations' Tax Benefits - Report

Tom Burroughes Group Editor October 8, 2020

Solow's Art Sale Highlights Foundations' Tax Benefits - Report

The story, beyond the obvious eye-catching appeal of a famous Renaissance painting, brings to light the tax-mitigation benefits of foundations.

The New York real estate mogul, Sheldon Solow, is planning to sell a Sandro Botticelli portrait for more than $80 million in a way that highlights how private foundations can save millions in tax, a report said.

The 540-year-old painting, Young Man Holding a Roundel, was bought by Solow for more than $1 million 40 years ago. The sale would attract a $33 million capital gains tax bill. However, Solow routed the Young Man painting via his private foundation, which means he will owe a fraction of that $33 million sum, according to Bloomberg yesterday. The artwork is being sold via Sotheby's next year.

The story throws light on the high valuations for fine art and the way that ultra-high net worth owners can use foundations and other structures to mitigate tax. At a time when wealth inequality is under political focus, such stories are also particularly sensitive. That said, such tax avoidance is entirely legal.

The media report said that this may be the first time a major Botticelli has come up.

Stefan Soloviev, Solow’s son, was quoted as saying that the foundation owns 99 per cent of the painting and will get the equivalent proceeds from the sale.

Solow’s foundation owns works by artists such as Jean Michel Basquiat, Joan Miró and Henri Matisse.

The website of the foundation states that its art collection is worth more than $200 million and is classified as a 501(c)3 private operating foundation. There is no public access to any of the artwork.

“As a private operating foundation, it affords tax benefits to the sole member of its board, Sheldon Solow. Donations can be made to the foundation and deducted from taxes at the current value of the artwork. The tax benefits of a private operating foundations were created because legislators expected foundations would provide a public benefit. Although the foundation has made donations and loans to other museums, it is otherwise inaccessible, even to individuals who work in the building,” it says.

Register for FamilyWealthReport today

Gain access to regular and exclusive research on the global wealth management sector along with the opportunity to attend industry events such as exclusive invites to Breakfast Briefings and Summits in the major wealth management centres and industry leading awards programmes