Von Sanborn
Day Pitney LLP

Generally, those buying art fall into one of two camps: collectors or investors. When collections become a significant portion of their net worth, collectors may be unwilling to sell because they are emotionally attached to the pieces they have purchased and lived with for years. In the same situation, investors may consider divesting at least a portion of their collection. So we see investors making more informed decisions.

Leo Hindery
Managing Partner
Intermedia Partners

I really try to stay in my lane, in our fund and my personal investing. As for those businesses where my colleagues and I have no particular expertise, we almost never get involved. I have a friend who oversees investments for a very large multigenerational family office in California, and he tells me about the family members constantly jumping in with ideas in areas where they don’t have expertise. I don’t know how he ever optimizes outcomes.

D. Stephen Antion
Winston & Strawn LLP

I have seen some investors so obsessed with avoiding taxes that they made major mistakes. One family had sold their business in a tax-free merger and had a very large, single-stock position in a major public company with zero tax basis. The plan was to hold until the owner died and get the income tax basis step-up. So they did not sell to diversify, but instead borrowed against the stock to fund purchases that were both personal—homes, plane, art—and investment. Leverage was not particularly high. However, in the financial crisis, the stock really melted down, much more than the market, which caused margin calls. They lost virtually everything because of this.

I have seen others that engaged in questionable tax shelter transactions. There is a big difference between intelligent tax planning and abusive tax shelters, but some people are so obsessed with avoiding tax that they cross the line. Ultimately, it is very costly.

This article provided by Bloomberg News.

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