JANIS v. COMMISSIONER OF INTERNAL REVENUE
The Ninth Circuit Court of Appeals today released an opinion in JANIS v. COMMISSIONER OF INTERNAL REVENUE, No. 04-74624, a tax appeal. The panel consisted of Stephen Reinhardt, Stephen S. Trott, and M. Margaret McKeown, Circuit Judges.
McKEOWN, Circuit Judge:
Conrad Janis and his wife Maria G. Janis (”Petitioners”) appeal the Tax Court’s holding that they are liable for deficiencies in their joint income tax returns from 1995 through 1997. These deficiencies resulted from Conrad taking inconsistent positions as to the value of an expensive art collection included in his father’s estate. On the premise that flooding the market with a large collection of works from significant artists, ranging from Piet Mondrian to Jean Arp and Grandma Moses, would depress the value of the works, Conrad and his brother Carroll Janis, as co-executors and the sole beneficiaries of the estate, calculated a discounted value for the collection. Conrad and Carroll ultimately agreed with the Internal Revenue Service (”IRS”) on a discounted valuation of the collection. Some years later, in valuing the gallery’s inventory, Petitioners claimed a higher, undiscounted market value as the tax basis for the collection in their joint tax returns. The Tax Court held that Petitioners were bound by the duty of consistency and could not report on their individual tax returns a value different than that stipulated to for the estate tax return. We agree and affirm. BACKGROUND Sidney Janis owned and operated, as a sole proprietorship, the Sidney Janis Art Gallery in New York. The gallery owned almost 500 works of art, many of them by well-known artists. In April of 1988, Sidney transferred the gallery, including the art collection, into a trust, with himself and his children, Conrad and Carroll, as trustees. Upon his death, the remaining trust assets were to be distributed to Conrad and Carroll in equal shares. Sidney died in November of 1989. Conrad and Carroll were named co-executors and the sole beneficiaries of his estate. . . .