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Want to Avoid U.S. Taxes on $80 Million Warhol? Buy More Art

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Chicago plastics manufacturer Stefan Edlis faced more than $20 million in U.S. capital gains taxes by selling his Andy Warhol painting to billionaire Steven A. Cohen eight years ago.

He paid zero. Half of the proceeds from the $80 million sale of Warhol’s 1964 “Turquoise Marilyn” were tax exempt as an asset of Edlis’s private foundation, he said. The other $40 million was used to buy more paintings, which was permitted under a long-standing provision in the tax code that allows investors to defer capital gains by buying similar property of equal or greater value.