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Author: irasmilo Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121451  
Subject: Re: Interesting tax case Date: 7/30/2012 1:53 PM
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http://www.nytimes.com/2012/07/22/arts/design/a-catch-22-of-......

What is the fair market value of an object that cannot be sold? The question... is one that lawyers for the heirs of the New York art dealer Ileana Sonnabend and the Internal Revenue Service are set to debate when they meet in Washington next month.


I must be missing something because I think the NY Times reporter got it wrong. I don't see any obstacle to selling "Canyon". The actual text of the 1940 Bald and Golden Eagle Protection Act specifically exempts the prohibited activities when the specimen was taken prior to 1940. Since Rauschenberg attested to the eagle's provenance dating to Teddy Roosevelt's Rough Riders, it's clearly pre-1940.

I suspect the current negotiations are an attempt to lower the IRS-assessed valuation since the heirs expect to lose their claim of $0 value.

Even if the sale were illegal as the heirs claim, the fine for violating the 1940 law is only $5000 and up to one year in prison for a first violation. I'm sure there are many wealthy art collectors who would consider that a small additional price to pay in order to own this work of art.

Looking at this from another perspective, if a drug "kingpin" were to die leaving a stash of illegal drugs with a street value of millions, I doubt the heirs could claim an estate tax valuation of $0 on the basis that the possession and sale of these drugs was illegal.

Ira
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