Leon Black, a board member at New York’s Museum of Modern Art (MoMA), used a tax clause to dodge paying capital gains taxes on pricey art dealings involving disgraced financier Jeffrey Epstein, according to a recent New York Times report. The art dealings are currently being investigated by a Senate committee as part of a probe into the private equity mogul’s connections to Epstein.
In February 2021, over 150 of artists and cultural figures signed an open letter, first published in Hyperallergic, urging MoMA to cut ties with Black. A month later, he stepped down from his position as chairman of the board; however, he remains a trustee at the museum.
Listen beautiful relax classics on our Youtube channel.
On November 23, 2016, Black sold “Figure Moyenne II” (1947), a bronze sculpture by Alberto Giacometti from his vast private art collection, for $25 million to the Haze Trust, an entity controlled by Epstein, according to documents reviewed by the New York Times. At the time, Epstein was a registered sex offender. The same day, a company tied to Black allegedly used the profits from the Giacometti sale to acquire Paul Cézanne’s watercolor painting “Portrait de Vallier de Profil” (1906) for $30 million.
This deal was structured as a 1031 exchange, otherwise known as a “like-kind exchange” — a tool that allows an investor to postpone paying capital gains taxes on the profits they make from a sale if they reinvest the proceeds into the purchase of another similar asset of equal or higher value, according to the Internal Revenue Services. With the 2017 passing of the Tax Cuts and Jobs Act, this tax incentive now strictly applies only to exchanges of real property, and like-kind exchanges of property such as artwork and collectibles no longer qualify for this tax loophole.
In another instance, one of Black’s art companies reportedly sold Georges Braque’s oil painting “Le Guéridon” to Epstein’s Haze Trust for $5 million. Again, these profits were similarly rolled over to purchase another unnamed Cézanne painting.
Hyperallergic has contacted Black’s legal representation for comment. MoMA has not replied to multiple requests for comment.
These dealings are currently being scrutinized in an ongoing investigation by the Senate Finance Committee into Black’s financial connections to Epstein. Beginning in June 2022, the probe has so far “uncovered serious tax issues and other concerns with trusts and structures Black executed to avoid over $1 billion in future gift and estate taxes,” the committee reported.
On July 25, Senator Ron Wyden of Oregon, the Democratic chair for the Senate Finance Committee, sent a letter to Black asking for an explanation behind the massive payments to Epstein, and expressed the committee’s concerns about “whether such payments were properly characterized as income or gifts for tax purposes.”
With a massive art collection reportedly valued at $1 billion, Black has so far refused to provide Senate investigators with any answers or evidence that would justify the $158 million he paid Epstein for a variety of tax and estate planning services between 2012 and 2017, the committee reported in July. These services include advice Epstein provided to Black regarding his private art collection.
This investigation also follows a lawsuit filed in July accusing Black of sexually assaulting and raping a teenage girl in Jeffrey Epstein’s New York townhouse, accusations that the MoMA trustee has denied. That same month, the New York Times also reported that Black struck a $62.5 million settlement deal with the US Virgin Islands in order to avoid potential future charges related to the territory’s investigation into Epstein’s sex trafficking ring.
Source: Hyperallergic.com