Timely News about the Art World and ARIS

July 22, 2012 – Art’s sale value? Zero. The tax bill? $29 million

THE NEW YORK TIMES – The Sonnabend heirs and the IRS have diametrically opposed views, $0 versus $65 million, respectively, of the value of the “Canyon” Rauschenberg assemblage, which is illegal to sell because it contains a protected stuffed bald eagle. (See ARIS News and Commentary, March 4, 2012 and February 23, 2012). A member of the IRS Art Advisory Panel has said that the panel appraised the work and its fair market value solely on the stunning aesthetic value of the work without reference to any relevant restrictions.

[ARIS Commentary: The dispute over the valuation of “Canyon” shows how appraisers often incorrectly follow or apply the Uniform Standards of Professional Appraisal Practice (USPAP), which must be followed to be IRS-compliant; especially USPAP Standard 7-2, which provides that the appraisal report must identify all economic attributes with a material effect on value which includes “any known restrictions, encumbrances, leases, covenants, contracts, declarations, special assessments, ordinances or other items . . .” Similarly, the IRS guidelines note that in determining an item’s fair market value, taxpayers should consider “any restrictions, understandings or covenants limiting the use or disposition of the property.” ]  Access Full Text

July 21, 2012 – An artifact, or a payday

THE NEW YORK TIMES – Don Larsen, a Yankees pitcher from the 1950s, has sought to recover his uniform, which he wore while pitching the only perfect World Series game, from the San Diego Hall of Champions. The hall has had possession of the uniform since 1964. The hall lacked accession paperwork to show that the uniform, which experts believe could sell for $250,000 to $1.5 million at auction, was a gift rather than a loan from Mr. Larsen.

[ARIS Commentary: The Larsen case highlights a growing challenge for museums and collectors focused on sports and other memorabilia where, as in this case, an item was accepted for loan or donation on only a handshake. Many museums have been entrusted with artifacts decades ago and, similarly, collectors have purchased items which at the time had modest prices but are now very valuable and for which they have no conclusive documentary proof of ownership. As a result, past donors or lenders and their families are increasingly seeking to recover items previously entrusted to museums to monetize their property in the hot auction market and buying collectors are increasingly being drawn into the same ambiguity over clear legal title of these objects.]  Access Full Text