July 31, 2012
The White Elephant in the Art Room
As I have previously discussed, the IRS has decided to give value to a piece of art that cannot be sold because of federal law. The piece of art, "Canyon," is a collage that prominently displays a stuffed bald eagle as the centerpiece of the work. Federal law makes it illegal to sell the eagle and the collage itself. Even though it cannot be sold, the IRS has determined that the art work still has value, which means that the IRS can tax the value of art. The estate tax that the piece incurred is about $40 million.
Canyon's previous owners have run into legal troubles before. In one instance, the government notified Ileana Sonnabend that she would have to relinquish the eagle when she tried to transfer it to an art exhibit that contained pieces from its creator, Robert Rauschenberg. The Department of the Interior stated that she had to relinquish the art work unless she could prove that "'the carcass was taken from the wild prior to 1940.'" It was in 1940 that the Bald Eagle Protection Act was passed into law. Mr. Rauschenberg was able to claim through a notarized statement that he obtained the eagle's carcass before the 1940 benchmark through one of Roosevelt's Rough Riders. This shows that, at one time, the federal government was quite understanding about the whole situation.
Recently, the federal government has proved that it can be quite unforgiving. The IRS originally valued the piece of artwork at about $15 million. When the attorney for the estate rejected the offer, claiming that the value should be zero, the IRS responded by issuing an official Notice of Deficiency stating that the value of Canyon had increased by $50 million. Who knew, as the author of this article put it, that the price of complacency with the IRS was $50 million?
See Eric Felten, Bald Eagle Is a White Elephant Thanks to Uncle Sam, Wall Street Journal, July 26, 2012.
Special thanks to Rob V. Robertson for bringing this article to my attention.
TrackBack URL for this entry:
Listed below are links to weblogs that reference The White Elephant in the Art Room: