Estate of Smith v. Commissioner

57 T.C. 650 (1972)

Study Aids
Case Briefs Overview
Casebooks
Case Briefs
E
From our private database of 46,300+ case briefs, written and edited by humans—never with AI.

Estate of Smith v. Commissioner

United States Tax Court
57 T.C. 650 (1972)

MP

Facts

David Smith was an artist who made nonrepresentational metal sculptures. When he died, Smith left behind 425 unsold sculptures. On its tax return, his estate (plaintiff) valued the sculptures at $714,000 for purposes of the estate tax. The Internal Revenue Service (IRS) (defendant) disagreed with the estate’s valuation of the sculptures and issued a deficiency. The estate challenged the deficiency in tax court. It argued that although the fair market value of all the sculptures, taken together, was $4,284,000, this value should be discounted to incorporate the depression that would result from all of the sculptures hitting the retail market simultaneously—a phenomenon commonly referred to in business tax law as the blockage discount. The estate further asserted that the blockage discount would depress the fair market valuation by 75 percent. Though the IRS initially valued the sculptures at $5,256,918, in tax court, it modified its fair market valuation of all of the sculptures, taken together, to match the estate’s. However, the IRS argued that the blockage discount did not apply and asserted that the fair market valuation should not be discounted. The tax court considered whether the blockage discount applied to the art market to decrease the valuation of the sculptures.

Rule of Law

Issue

Holding and Reasoning (Tannenwald, J.)

What to do next…

  1. Unlock this case brief with a free (no-commitment) trial membership of Quimbee.

    You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 805,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.

    Unlock this case briefRead our student testimonials

  2. Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.

    Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.

    Learn about our approachRead more about Quimbee

Here's why 805,000 law students have relied on our case briefs:

  • Written by law professors and practitioners, not other law students. 46,300 briefs, keyed to 988 casebooks. Top-notch customer support.
  • The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
  • Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
  • Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.

Access this case brief for FREE

With a 7-day free trial membership
Here's why 805,000 law students have relied on our case briefs:
  • Reliable - written by law professors and practitioners, not other law students
  • The right length and amount of information - includes the facts, issue, rule of law, holding and reasoning, and any concurrences and dissents
  • Access in your class - works on your mobile and tablet
  • 46,300 briefs - keyed to 988 casebooks
  • Uniform format for every case brief
  • Written in plain English - not in legalese and not just repeating the court's language
  • Massive library of related video lessons - and practice questions
  • Top-notch customer support

Access this case brief for FREE

With a 7-day free trial membership

Casebooks

Art Law

Key Terms