What is the fair market value of an object that cannot be sold?

Seems like a silly question, right? Not for the inheritors of a $1 billion art collection. It seems that one of the pieces conatains a stuffed American Bald Eagle. Federal law makes it illegal to sell, so the appraisers gave it a value of $0. The IRS has a different take (of course), and they want $30 million in taxes based on fair market value, plus $11 million in penalties and late fees.

So how can something that can’t be sold have a market value?

http://www.utsandiego.com/news…

Because the work, a sculptural combine, includes a stuffed bald eagle, a bird under federal protection, the heirs would be committing a felony if they ever tried to sell it. So their appraisers have valued the work at zero. But the IRS takes a different view. It has appraised “Canyon” at $65 million and is demanding that the owners pay $29.2 million in taxes.

Heirs to important art collections are often subject to large tax bills. In this case, the beneficiaries, Nina Sundell and Antonio Homem, have paid $471 million in federal and state estate taxes related to Sonnabend’s roughly $1 billion art collection, which included works by Modern masters from Jasper Johns to Andy Warhol. The children have sold off a large part of it, $600 million worth, to pay the taxes they owed, said their lawyer, Ralph E. Lerner. But they drew the line at “Canyon,” a landmark of postwar Modernism made in 1959 that three appraisers they hired, including the auction house Christie’s, had valued at zero. Should they lose their fight, the heirs, who were unavailable for comment, will owe the taxes plus $11.7 million in penalties. Lerner estimated it would take about 75 years for them to absorb the deduction.

In this instance, the 1940 Bald and Golden Eagle Protection Act and the 1918 Migratory Bird Treaty Act make it a crime to possess, sell, purchase, barter, transport, import or export any bald eagle – alive or dead. Indeed, the only reason Sonnabend was able to hold on to “Canyon,” Lerner said, was due to an informal nod from the U.S. Fish and Wildlife Service in 1981.

About TLCWeld

Chairman, Reading Republican Town Committee Constitutional Conservative As a son of NH, I choose to Live Free or Die