Monday, September 25, 2006

Mistakes were made

The Childe Hassam painting floating around the Brooke Astor guardianship dispute moved back to center stage over the weekend. The New York Times reported Sunday that Astor's son overstated the cost basis of the painting on his mother's income tax return -- by more than $7 million. Astor paid $172,010 when she bought the painting in March 1970, but the basis reported on her 2002 tax return was $7.425 million, the effect of which was to significantly reduce the income taxes she was required to pay on the $10 million sale (she netted $8 million, after paying a $2 million commission to her son). Amended returns are reportedly being prepared showing the correct tax due, but there will also be interest to pay as well as the possibility of very significant underpayment penalties. My most recent post on the Astor matter is here.