IRS Buttfuckery

[draco664]

The children of a wealthy individual inherit his art collection. They have it audited and valued by experts (from Christies, in fact) and report that value to the IRS.

The tax bill comes in, and they have to sell a big chunk of the artwork to cover the bill. Okay, fine. I disagree with that, but hey.

The IRS however, also use art valuation experts (to ensure people don't undervalue pieces, naturally).

Now, once particular piece cannot, by law, be bought or sold. (In this instance, it's because it contains the remains of a bald eagle - it's a felony to buy it and a felony to sell it)

Logically, something that cannot be legally sold has a monetary value of zero. (You can't sell your kidneys legally, even though they're worth quite a bit) But this is the IRS, so logic takes a back seat to them getting a cut.

Their art valuation comes back in at $65million. A member of the panel actually said

"It’s a stunning work of art and we all just cringed at the idea of saying that this had zero value."

So, the IRS thinks it's worth $65mill. So that's $29.2mil in tax please, payable immediately. Oh, and just to add some spikes to the rogering, they're tacking on another $11mil fine for underreporting the value of the work.

Link

So, here's something worth exactly $0, and you owe $40 million in taxes and fines. Something is borken somewhere.

[Greenday]

There's gotta be something they can do. This is just ridiculous and you can't charge somebody for something that's worth absolutely nothing.

[Ginger Tea]

I'd invite all those IRS art valuers to a private showing of that piece just so they could see it be set on flames.

[Nekojin]

I'd invite the IRS to seize that particular piece to offset the taxes that the Estate owes. If it's worth 65 million as appraised, surely they could use it to offset, say, 30 million in tax.

Edit: The IRS's valuation will probably stand up in court, simply because... it may be illegal to sell in the US, but it can surely be shopped to someone overseas. I hear that there are some Japanese collectors who have a keen interest in Western artifacts like this.

[draco664]

I'd invite the IRS to seize that particular piece to offset the taxes that the Estate owes. If it's worth 65 million as appraised, surely they could use it to offset, say, 30 million in tax.

Edit: The IRS's valuation will probably stand up in court, simply because... it may be illegal to sell in the US, but it can surely be shopped to someone overseas. I hear that there are some Japanese collectors who have a keen interest in Western artifacts like this.

From the article, it's both illegal to buy and sell, so even selling to an overseas collector is a felony.

[bara]

Donate it to a museum, take the write off.

Problem solved.

[Nekojin]

From the article, it's both illegal to buy and sell, so even selling to an overseas collector is a felony.

Not if you take it with you, and sell it outside of US territory.

[Canarr]

Donate it to a museum, take the write off.

Problem solved.

That's probably the best solution, yes.

[draco664]

Not if you take it with you, and sell it outside of US territory.

*Sigh* Transporting's out too. Sorry. They've got ya there as well.

If I just wrote out the applicable law in the first place everyone would have been like TL;DR...

[Ginger Tea]

Oh BTW IRS, I'm using this rare valuable manuscript as kidling for the fire, anyone got a batman #1 I can wipe my arse with?

Yeah if they can write it off as a donation they should, if not I'd still go with my burn it out of spite infront of all the art snobs in the world

[Canarr]

Not to mention, that thing is ugly as hell.

[HYHYBT]

I can *almost* see the IRS's side. That it's illegal to sell doesn't mean that it cannot be sold; after all, it's illegal to sell cocaine, too, but when there's a bust big enough to make the news they report a value of the drugs seized, and it's far from nothing.

According to the linked article, it's also illegal to possess.

[wolfie]

I hate to say this, but this shows poor planning on the part of the heir. He had a team of experts for valuation purposes, but he didn't use them properly. After all, the IRS is known for douchebaggery, and reporting an artifact as zero value (while it's the easy way out) is going to raise a red flag.

Since one of the items is illegal to buy/sell/possess (probably wouldn't be charged for possession, since it was inherited, and if he were actively looking for a way to dispose of it legally, it would be showing intent to not continue possessing it), present this as a specific problem to the experts: "It is illegal for me to either keep or sell this item - how can I legally dispose of it in such a manner to get the most value out of it?"

One possibility would be to donate it to a museum which could legally own it, and take the tax write-off for its theoretical (since a legally-unsaleable item has a legal retail value of zero) value.

Another, somewhat evil, route would have been to approach the IRS: "I have inherited this piece of artwork which I can't legally either keep or sell - could you have your experts determine its value for purposes of the estate tax, on the understanding that the IRS will accept the artwork, in lieu of cash representing the value which THEY have determined it to be worth, as part payment for estate taxes on the collection of which this artwork is a part". The IRS is, after all, a branch of the government, and can therefore legally own items which private citizens can't. If they "highball" the estimate, it means they get less cash out of the collection, since they would be receiving payment "in kind" at the value they pin on this item.

[crashhelmet]

If I'm not mistaken, the IRS has limits as to how much you can write off. There may be only so much they can get credit for with donating the painting and then having to pay the rest.

[daleduke17]

*Sigh* Transporting's out too. Sorry. They've got ya there as well.

If I just wrote out the applicable law in the first place everyone would have been like TL;DR...

So, if said individual moves, he can't take it with him... or is there a caveat to the law for moving but keeping same ownership?