John Kerry cashes in on art (not eager with details re $145K capital gain from art investment)

BOSTON GLOBE ^ | April 20, 2004 | ALEX BEAM

[Liz]

How unsurprising that the John Kerry campaign isn't eager to provide additional details about the senator's second-largest source of income in 2003: the $145,000 capital gain from the sale of his one-quarter ownership of a famous Dutch masterpiece, Adam Willaerts's "The Arrival of Frederick and Elizabeth, Prince and Princess of the Palatinate, at Flushing, 29th April 1613."

Is selling 17th-century artwork for profit perhaps too . . . aristocratic for the friend-of-the-people image our junior senator would like to project?

In his 2003 tax filing, released last week, Kerry reported $147,000 of income from his day job in the US Senate and the hefty capital gain from the sale of the Willaerts. The form indicated that his share of the painting was acquired by Kerry in 1996. The facts are even more complicated. Teresa Heinz Kerry was a one-half owner of the painting, with art dealer Peter Tillou, when she assigned one half of her interest to Kerry, whom she married in 1995.

"She and I bought it in London about 10 years ago," says Tillou, whose base of operations is now in Litchfield, Conn. "We're very good friends, and she said, `Peter, let's buy it together.' It was an investment for her."

The painting never hung in any of Kerry's or Heinz Kerry's domiciles in Boston, Pittsburgh, or Washington, D.C. Tillou kept it in Litchfield or in New York, or showed it at exhibitions, like one held at the Chrysler Museum in Virginia four years ago.

Tillou says he contacted Heinz about buying back the painting, with an eye to reselling it, a few years ago.

Over time, he reimbursed her $1 million, her original one-half stake in the purchase price. When he sold it last year to a private collector for $2.7 million, he shared the $700,000 profit with her. One-quarter of the profit, or $175,000, showed up on Senator Kerry's tax return as a capital gain. Kerry reduced the reported gain to $145,000 using offsetting losses.

Heinz Kerry and her first husband, the late Senator John Heinz, were famous art collectors, specializing in 17th-century Dutch works, primarily still lifes. Kerry, too, has become quite knowledgeable about art during his second marriage. "He's fairly intellectual," one dealer noted, admiringly.

--SNIP--

[So Cal Rocket]

If Teresa and JF'nK are filing separate tax returns, then they have to keep separate finances...

I don't believe that Mass. is a community property state.

[Liz]

Such things don't apply to Pubbies.

[Grampa Dave]

I don't think that their property is community property.

She apparently had all sorts of pre nups and this little stunt has more legs than a crooked centipede.

[aShepard]

From the IRS:

There are some exceptions to the tax rules on gifts. The following gifts do not count against the annual limit:

Tuition or medical expenses that you pay directly to an educational or medical institution or health care provider for someone's benefit
Gifts to your spouse
Gifts to a political organization for its use
Gifts to charities

Jack Welsh had a bullet proof pre-nup (well at least for the first ten years before he took his pee-pee out of his pants),

I'll bet Jane never paid taxes on the Mercedes, the houses, the rings.

[Grampa Dave]

Thanks for clarifying this.

[So Cal Rocket]

My understanding was that Teresa can only contribute $2,000 to Kerry's campaign, per campaign finance law, but that candidates themselves can invest unlimited amounts from their own finances.

What would prohibit her from gifting Kerry $50M and then he in turn donates it to the campaign.

Am I wrong?

[aShepard]

Yeah, I guess so. But, I'm now in over my head in tax issues, and I can't readily find the info at irs.gov.

Sorry

[Redcoat LI]

That was uncalled for!

Picking on Oragutans, shame on you!

[Liz]

Yeah, you're right. The comparison is an insult to every orangutan in existence today.

[Henrietta]

"I'm no expert on taxes, but it seems to me he should have claimed it as a gift in 95 or 96."

Gifts to a spouse are free of gift tax.

[Henrietta]

"The gift receiver pays the taxes.

Back then she could have given him $10,000 year as a non taxable gift for him from her."

Actually, the giver pays the gift tax. If the giver doesn't pay it, the recipient can be liable.

In this case, there is no gift tax due, because spouses can make unlimited amounts of gifts to each other.