Technical article
Keep It Whole or Sell: Trusts, Partnerships and Shared Ownership
The case people cite is Estate of Elkins v. Commissioner, decided by the Fifth Circuit on 15 September 2014.
Imagine a widower in the United States with a small collection of paintings. His three children each love different pieces. He would like the works to stay together, and he has heard that a family company might do it.
Here is what the sources show, and where they stop.
What a family company is said to do
One trade article for trust and estate advisers describes a family company holding artwork. Members share the works on rotation, receive equal membership interests as gifts, and share any sale equally. It lists risks. Section 2036 of the tax code may pull the art back into the estate if the owner keeps possession or controls who enjoys the works. The owner pays fair rent. Whether a discount for fractional interests applies is uncertain. This is a tier U source, a single article from 2016.
The same article says wills that call for equal division or a lottery often fail to stop conflict, because attachment to particular pieces is hard to manage. It adds that art is slow to sell and hard to price, so a forced sale is costly.
What the court case says
The case people cite is Estate of Elkins v. Commissioner, decided by the Fifth Circuit on 15 September 2014. It was about co-ownership, not a company. The decedent held 73.005% of 61 works. His children co-owned the rest under agreements that barred a sale without everyone's consent.
The court allowed discounts for fractional interests in co-owned art. A law firm's account gives the numbers: the estate claimed a blanket 44.75%, the Tax Court allowed 10%, and the tax agency argued for 0. The refund at stake was over US$14 million, and the agency had sought about US$9 million in additional tax. That account is tier C.
The trade article adds that the tax agency has not acquiesced to Elkins. In other words, it has not said it will follow the case elsewhere.
| Question | What the sources show |
|---|---|
| Does Elkins cover a family company? | No, it concerns co-ownership of art |
| What discounts were argued? | 44.75% (estate), 10% (Tax Court), 0 (tax agency) |
| Has the agency accepted the ruling? | The trade article says it has not |
| What happens to basis at death? | The trade article says a sale at death usually gets a stepped-up basis; a lifetime sale is taxed at 28%, the collectibles rate |
The objection
You might say a discount sounds like the point. It may be. But a discount is an argument over value, and the Elkins numbers show how far apart the sides can be. The estate tax exclusion for 2026 is US$15 million per person, according to the tax agency's own page. For many collections, the tax is not the question. Whether the children can live with shared ownership may be.
Who this touches
The children, who may need to agree for years on who hangs what, who pays for insurance, and who may sell. The executor, who may face a co-owner who wants out. And papers, since agreements that bar a sale without consent were part of the Elkins facts.
You could
You could ask each child whether they want the works, a share of the proceeds, or neither. You could ask whether co-ownership, a company, a trust or a sale suits your family, and bring the question to a lawyer in your state. You could ask whether one child would take the collection and balance the others in cash.
How has your family kept something together, or let it go? Share it here. Someone may be glad to read it.
Figures are estimates for planning, based on public data. Date read: October 2026.
Sources
- Grossman LLP account of Estate of Elkins v. Commissioner, 5th Circuit, 2014 (C)
- InsuranceNewsNet trust and estate adviser article, 2016 (U)
- Internal Revenue Service estate tax page (A)
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