---- — DETROIT — The estate of former Detroit Pistons owner Bill Davidson is challenging the Internal Revenue Service in U.S. Tax Court over billions of dollars.
The IRS objects to how Davidson’s accountants valued stock in his company, Guardian Industries, which makes glass and parts for the auto industry, the Detroit Free Press reported Friday. Other key issues include tens of millions of dollars given to Davidson’s wife, and money used to help her daughter build a home in Bloomfield Hills.
The IRS argued in a May court filing that Davidson’s accountants undervalued privately held Guardian stock placed in trusts for family members. The late billionaire’s attorneys counter in a petition filed last week that the IRS is overvaluing the stock and not taking into account the beating that automotive- and construction-related stocks took around the time of Davidson’s death in 2009.
The newspaper said Davidson also canceled debts to heirs when he died, giving them ownership of certain assets. The IRS says payments made to relatives while Davidson was alive should have higher and that some of the assets qualified as taxable gifts.
The IRS, which declined to comment, is seeking about $2 billion or more in estate taxes. The agency’s Cincinnati office calculated the worth of Davidson’s taxable estate and gifts at $4.6 billion and set the tax and penalties at $1.9 billion.
Beth Kaufman, a trusts and estate lawyer at Caplin & Drysdale in Washington, D.C., is not involved in the case but said the IRS’ deficiency notice includes double-counting, which means the tax bill likely will decrease. Kaufman said the agency include includes as much as it can in such a notice because it can’t add items later.
“I would guess that this case will end up being litigated,” she said. “There’s just too much money at stake.”
Information from: Detroit Free Press, http://www.freep.com