Janis

BACKGROUND

Sidney Janis owned and operated, as a sole proprietorship, the Sidney Janis Art Gallery in New York. The gallery owned almost 500 works of art, many of them by well-known artists. In April of 1988, Sidney transferred the gallery, including the art collection, into a trust, with himself and his children, Con- rad and Carroll, as trustees. Upon his death, the remaining trust assets were to be distributed to Conrad and Carroll in equal shares. Sidney died in November of 1989. Conrad and Carroll were named co-executors and the sole beneficiaries of his estate. JANIS v. CIR 10015 After Sidney’s death, the estate hired Sotheby’s to value the collection. Sotheby’s valued the works on an item-by-item basis at fair market value. The appraiser did not account for any diminution in value that might occur in the event the entire holdings were placed in the market at one time. How- ever, the estate calculated a discount—known as a blockage discount—that accounted for the number of pieces in the col- lection, the nature of the works, and other factors that would affect the actual realized price as a consequence of putting such a large number of works on the…