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The recently decided case Estate of Ehrlich v. United States, 2026 U.S. Dist. LEXIS 22912, offers a reminder of the risks art professionals face when stepping out of their lanes and providing tax advice.
This case concerns the operations of David Ehrlich, president and sole owner of Abbey Art Consultants, Inc. and the art donations he facilitated for clients. Abbey Art was engaged in the business of buying and reselling art in a formulaic manner. The art would be purchased and stored by Abbey Art. Then, at the beginning of the year, Abbey Art would send a form letter to its clients listing the total cost of the artworks and their estimated appraised values.
Through these letters, Abbey Art requested a deposit payment (typically ranging between 5% to 10% of the estimated purchase price), confirmed that the client’s ownership of the art would commence on the date that artworks were placed in Abbey Art’s segregated storage and reminded clients of the one-year holding period required to claim tax deductions on future donations. Abbey Art would continue to hold the artworks for approximately one year. After this time, Abbey Art indicated that clients could take a tax deduction for the artwork’s appraised value and provided clients with completed appraisals and pre-filled tax forms. The estimated purchase price initially quoted to Abbey Art’s clients was typically about 20% of the estimated appraised fair market value of such artwork, resulting in Abbey Art’s clients claiming tax deductions that were four to five times greater than the initial purchase price.
In this Wealth Management article authored by Diana Wierbicki, chair of the firm’s Art & Cultural Property practice, and associate Soung Young Choe discuss the Estate of Ehrlich federal case and how the decision underscores the significant risks art professionals face when offering tax guidance beyond their expertise.
To read the full article, please visit Wealth Management’s website (subscription may be required).
This case concerns the operations of David Ehrlich, president and sole owner of Abbey Art Consultants, Inc. and the art donations he facilitated for clients. Abbey Art was engaged in the business of buying and reselling art in a formulaic manner. The art would be purchased and stored by Abbey Art. Then, at the beginning of the year, Abbey Art would send a form letter to its clients listing the total cost of the artworks and their estimated appraised values.
Through these letters, Abbey Art requested a deposit payment (typically ranging between 5% to 10% of the estimated purchase price), confirmed that the client’s ownership of the art would commence on the date that artworks were placed in Abbey Art’s segregated storage and reminded clients of the one-year holding period required to claim tax deductions on future donations. Abbey Art would continue to hold the artworks for approximately one year. After this time, Abbey Art indicated that clients could take a tax deduction for the artwork’s appraised value and provided clients with completed appraisals and pre-filled tax forms. The estimated purchase price initially quoted to Abbey Art’s clients was typically about 20% of the estimated appraised fair market value of such artwork, resulting in Abbey Art’s clients claiming tax deductions that were four to five times greater than the initial purchase price.
In this Wealth Management article authored by Diana Wierbicki, chair of the firm’s Art & Cultural Property practice, and associate Soung Young Choe discuss the Estate of Ehrlich federal case and how the decision underscores the significant risks art professionals face when offering tax guidance beyond their expertise.
To read the full article, please visit Wealth Management’s website (subscription may be required).
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Chair, Art & Cultural Property