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[gcubed]

 

[Gaborn]

They tried to play the system and got burned for it. No sympathy.

How are they playing the system? From the NYTimes:

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 Internal Revenue Service takes a different view. It has appraised “Canyon” at $65 million and is demanding that the owners pay $29.2 million in taxes.

“It’s hard for me to see how this could be valued this way because it’s illegal to sell it,” said Patti S. Spencer, a lawyer who specializes in trusts and estates but has no role in the case.

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.

Inheritances are generally taxed at graduated rates depending on their value. In this case, the $29.2 million assessment for “Canyon” was based on a special penalty rate because the I.R.S. contends the heirs inaccurately stated its value.

While art lovers may appreciate the I.R.S.’s aesthetic sensibilities, some estate planners, tax lawyers and collectors are alarmed at the agency’s position, arguing that the case could upend the standard practice of valuing assets according to their sale in a normal market. I.R.S. guidelines say that in figuring an item’s fair market value, taxpayers should “include any restrictions, understandings, or covenants limiting the use or disposition of the property.”

Mr. Lerner said that the I.R.S.’s handling of the work has been confusing. Last fall, the agency sent the family an unsigned draft report that it was valuing “Canyon” at $15 million. After Mr. Lerner replied that the children were refusing to pay, the I.R.S. then sent a formal Notice of Deficiency in October saying it had increased the valuation to $65 million.

That figure came from the agency’s Art Advisory Panel, which is made up of experts and dealers and meets a few times a year to advise the I.R.S.’s Art Appraisal Services unit. One of its members is Stephanie Barron, the senior curator of 20th-century art at the Los Angeles County Museum of Art, where “Canyon” was exhibited for two years. She said that the group evaluated “Canyon” solely on its artistic value, without reference to any accompanying restrictions or laws.

“The ruling about the eagle is not something the Art Advisory Panel considered,” Ms. Barron said, adding that the work’s value is defined by its artistic worth. “It’s a stunning work of art and we all just cringed at the idea of saying that this had zero value. It just didn’t make any sense.”

Mr. Lerner told Forbes magazine, which reported the dispute in February, that Joseph Bothwell, a former director of the agency’s Art Appraisal Services unit, had told him “there could be a market for the work, for example, a recluse billionaire in China might want to buy it and hide it.” Mr. Bothwell has since retired from the I.R.S. Ms. Barron said she did not consider any hypothetical black-market buyer.

Still, the notion that the I.R.S. might use the black market in this way to determine a fair market value has surprised some tax experts. James Joseph, a tax lawyer with Arnold & Porter in Washington, noted that the I.R.S. has taxed illegal contraband at its market value, but added: “I don’t know of any instance where the I.R.S. has assumed taxpayers will engage in an illegal activity in order to value their assets at a higher amount. Al Capone went to jail for not paying income taxes on his illegal income, but this is very different than that.”

This seems FAR outside of normal IRS practices and that's a problem.

 

[KingGondo]

I don't feel sorry either, but if the tax people are saying they owe millions of dollars on something that is, in effect, valueless, then that is a problem. This is the kind of thinking that leads you to say that it's ok for thieves to steal property from wealthy people because they have plenty. Even if you don't feel personally sorry for them because of how otherwise fortunate they are, that doesn't imply that it isn't a problem worthy of addressing.

The issue of valuation will be settled in court, as it should be.

What I have issue with is Fox News' "pity the rich" angle.

 

[Dark Knyght]

except there's no real estate tax for normal people in the first place



What's the difference between inheritance and receiving a 600 million dollar check from your father? Both are forms of income for the person.

The law is still dumb either way. If an individual person chooses to give me money, I don't see what it has to do with the government, no matter what the amount.

 

[Aylinato]

They are not trying to dodge taxes, which is why they sold over $600M and have paid $471M in taxes on the collection.

In a more relateable example, you have long time farm owners who have their kids inherit the farm when they die - and the kids can't afford to even keep it because they are hit with a big inheritance tax and are forced to sell the farm simply because someone's heart isn't beating anymore.

The USA barely has any family owned farms because multibillionaire companies have bought most of them up. As the taxes on millionaires and billionaires keeps going down because people like you think that they somehow equate to normal, average people and how much money we have. Normal people set up funds on the side to handle taxes for things like your example. However your defense of people who didn't earn millions of dollars is sickening, they gain the most from those taxes because they have stuff that they need prtected.

 

[Mr. B Natural]

This sounds like a court case. Why are people arguing again? The story isn't over yet.

 

[balladofwindfishes]

Setting a price on an unsellable item is needed for many more reasons that taxes. Insurance is a huge one.

The law is still dumb either way. If an individual person chooses to give me money, I don't see what it has to do with the government, no matter what the amount.

so I take it you're against sales tax and income tax, right?

 

[twobear]

I mean, you obviously can value something you can't legally sell, e.g. drugs.

 

[andycapps]

Yeah, I don't feel sorry for them.

At the beginning of the article I did... Then I got to that part and definitely did not.

 

[Funky Papa]

Kosmo thread.

 

[Drek]

If it can't be sold, how can it be valued at $65 mil?

I'd destroy the piece and ask for a re-valuation.

Or better yet, donate the piece to a museum and write off the entirety of it's value from the rest of the estate taxes, resulting in an additional $36M of retained value from the rest of the collection.

Sounds like their lawyers are balls deep in milking the estate for as much money as possible. As soon as the IRS skyrocketed their evaluation a charitable donation becomes a massive fiscal loophole you could drive a truck loaded with crisp $100 bills through.

 

[shortyme]

Damn, some super bitter people in this thread.

 

[Pepto]

So their appraisers have valued the work at zero.

I would be cool with this if I could buy the piece from them for anything above this value.

 

[Dark Knyght]

Setting a price on an unsellable item is needed for many more reasons that taxes. Insurance is a huge one.



so I take it you're against sales tax and income tax, right?

Nope, you take it wrong.

 

[methane47]

I dont understand art

29 mil for that?!

 

[Emerson]

So they thought the law applies differently to the rich and found out that the IRS doesn't play favorites like that. Good for the IRS.

No, they didn't want to pay taxes on something that is essentially worthless, which is completely reasonable.

This thread is a fucking joke. The IRS is clearly in the wrong on this and yet all we get is "rich people problems LOL." Just because they're rich doesn't mean they aren't entitled to protection from ridiculous claims.

 

[Tim-E]

In a more relateable example, you have long time farm owners who have their kids inherit the farm when they die - and the kids can't afford to even keep it because they are hit with a big inheritance tax and are forced to sell the farm simply because someone's heart isn't beating anymore.

If they are kids they can't work on the farm due to gubment overreach, anyway, so it's a lose/lose, right?

Gubment wants to prevent Kosmo from putting his kids to work on a farm and then steal the farm from them once it becomes theirs. Obama's out for you, man.

 

[Patryn]

Or better yet, donate the piece to a museum and write off the entirety of it's value from the rest of the estate taxes, resulting in an additional $36M of retained value from the rest of the collection.

Sounds like their lawyers are balls deep in milking the estate for as much money as possible. As soon as the IRS skyrocketed their evaluation a charitable donation becomes a massive fiscal loophole you could drive a truck loaded with crisp $100 bills through.

This seems to be the obvious solution. Just donate it and write it off.

 

[BruiserBear]

Damn, some super bitter people in this thread.

For some people it's a way of life. Someone else has more than I do. Fuck them.

 

[balladofwindfishes]

Nope, you take it wrong.

so you on one hand you say

The law is still dumb either way. If an individual person chooses to give me money, I don't see what it has to do with the government, no matter what the amount.

On the other you say you don't disagree with income tax or sales tax which is an individual choosing to give you money?

Uhh...

 

[Partial Gamification]

First, it is Fox News so it is obviously a fluff piece to get under people's skin about the Federal government’s invasive nature.
[edit]: Sculpture already posted

 

[dynamitejim]

If it's a stunning work of art and can't be sold then just donate it to a museum. Let everyone enjoy it.

 

[Aylinato]

No, they didn't want to pay taxes on something that is essentially worthless, which is completely reasonable.

This thread is a fucking joke. The IRS is clearly in the wrong on this and yet all we get is "rich people problems LOL." Just because they're rich doesn't mean they aren't entitled to protection from ridiculous claims.

They do have protection, they can go to court, which they can afford with their millions of millions of dollars

 

[Drek]

This seems to be the obvious solution. Just donate it and write it off.

Hell, they can gift it to me if they want. You can carry charitable donation deductions out for up to five years if it exceeds 30% of your income.

In other words, I'd be tax exempt for five years. Bad ass.

 

[balladofwindfishes]

No, they didn't want to pay taxes on something that is essentially worthless, which is completely reasonable.

I wonder if they'll just laugh it off if the piece is ever destroyed. After all, it's worthless right? They wouldn't claim the 65 million in insurance.

 

[BruiserBear]

First, it is Fox News so it is obviously a fluff piece to get under people's skin about the Federal government’s invasive nature. Second here is the piece:

Yeah! Never mind if the story is true, let's attack the source for telling us about it!

 

[twobear]

LOL on infinite worlds at the people writing the people off who don't really care as jealous.

 

[Gaborn]

If it's a stunning work of art and can't be sold then just donate it to a museum. Let everyone enjoy it.

How about they keep it as Rauschenberg intended and the IRS follows its own precedents? People really need to read the NYTimes version of the story. This is not about people trying to cheat the IRS, this is about the IRS not following their own guidelines simply because their art appraisal service find the work impressive.

 

[KingGondo]

Yeah! Never mind if the story is true, let's attack the source for telling us about it!

It's Fox News, dude.

And he never said it was untrue, just that it was a piece of sensationalist journalism with an obvious ideological bent.

 

[The Faceless Master]

i'd normally laugh and say "suck it up", but it seems REALLY dirty for the people who collect the taxes to put such a huge a value on something that cannot be sold and people who are experts at selling set the value at 0 so it can't be sold.

 

[diffusionx]

No, they didn't want to pay taxes on something that is essentially worthless, which is completely reasonable.

This thread is a fucking joke. The IRS is clearly in the wrong on this and yet all we get is "rich people problems LOL." Just because they're rich doesn't mean they aren't entitled to protection from ridiculous claims.

They are protected from ridiculous claims. It's called court.

IRS says they owe $X, they say they owe $0. They will go to court and present evidence of why they owe $0. The IRS will present evidence that they owe $X. My guess is that they will win. It's really not that big of a deal. It happens every day in this country.

My opinion is that they shouldn't have to pay the tax, and that this case doesn't prove anything one way or the other about the concept of estate taxes or anything else. It's a tax dispute, nothing more.

 

[ThoseDeafMutes]

Nope, you take it wrong.

If you're given a bunch of money, then it's essentially income, which would be taxed normally. Why should the fact that you didn't have to work for it make you immune from this?

 

[ReBurn]

The law is still dumb either way. If an individual person chooses to give me money, I don't see what it has to do with the government, no matter what the amount.

Well, Article I, Section 8, Clause 1 of the constitution gives the Federal government the power to tax to provide for the common defense and general welfare of the United States. Also, the 16th amendment to the constitution gives the Federal government the ability to tax income. When someone gives you money, the government may see that money as income.

It's not that far of a stretch to see how your acquisition of money has something to do with the government.

 

[Aylinato]

How about they keep it as Rauschenberg intended and the IRS follows its own precedents? People really need to read the NYTimes version of the story. This is not about people trying to cheat the IRS, this is about the IRS not following their own guidelines simply because their art appraisal service find the work impressive.

See, the USA already has a system to deal with this, without having to complain to the news. It's called our amazing court system, which I have full faith in.

 

[Gaborn]

It's Fox News, dude.

And he never said it was untrue, just that it was a piece of sensationalist journalism with an obvious ideological bent.

READ the NYTimes article. It's arguable that Fox is UNDERSELLING the situation.

 

[BruiserBear]

It's Fox News, dude.

And he never said it was untrue, just that it was a piece of sensationalist journalism with an obvious ideological bent.

OK. Cool.

Then go about reading this sensationalist piece of journalism, on the same story.


http://www.nytimes.com/2012/07/22/a...-and-taxes-starring-a-stuffed-eagle.html?_r=2

 

[Sanky Panky]

This thread should be about the stupidity of the bald eagle law.

As for valuing the art, contraband can be given a value, and criminals are usually charged back taxes on earnings. I'm not in any way saying these people are criminals, but the same principle applies.

The IRS suggesting that a secret Chinese buyer step in, is indeed a dumb silly comment.

 

[Zabka]

If something can't be sold then the value is zero. Fuck the IRS.

 

[Emerson]

I wonder if they'll just laugh it off if the piece is ever destroyed. After all, it's worthless right? They wouldn't claim the 65 million in insurance.

I really don't see how this is relevant at all. It cannot be sold so it cannot have a value. It shouldn't be taxable nor should it be valued at 65 million dollars for insurance purposes.

They are protected from ridiculous claims. It's called court.

IRS says they owe $X, they say they owe $0. They will go to court and present evidence of why they owe $0. The IRS will present evidence that they owe $X. My guess is that they will win. It's really not that big of a deal. It happens every day in this country.

My opinion is that they shouldn't have to pay the tax, and that this case doesn't prove anything one way or the other about the concept of estate taxes or anything else. It's a tax dispute, nothing more.

Of course I understand they can and will go to court over it. I'm responding to the people in this thread saying they should just pay it as if they're trying to escape justified taxes or something.

 

[gcubed]

i'd normally laugh and say "suck it up", but it seems REALLY dirty for the people who collect the taxes to put such a huge a value on something that cannot be sold and people who are experts at selling set the value at 0 so it can't be sold.

if the value presented to the IRS is 0 then the value on insurance for the piece should be 0.

 

[george_us]

B...but how will they bribe their local politicians now?

 

[Krauser Kat]

Art shouldn't be taxed like that and the appraisal is shit. Im all for the estate tax but this is pretty fucked up.

 

[TheExodu5]

These poor incredibly rich people who have to pay some taxes that they can't dodge for once.

My heart goes out to them ;_;

Regardless of their wealth, valuing a piece that cannot be sold as being worth $65 million is ridiculous.

 

[Aylinato]

Art shouldn't be taxed like that and the appraisal is shit. Im all for the estate tax but this is pretty fucked up.

If only there were a system that could handle disputes like this. Like an impartial person overhearing both cases and making a judgement.

 

[Partial Gamification]

I dont understand art

29 mil for that?!

There was a funny comment made at the Chelsey Garden Show, James May did a platicine (play-dough) garden in one of his shows. Asking a passer-by if the installation was art, this gentleman responded: "Well it serves no purpose, so it must be art."

The novelty of this scultpure is that is has a stuffed bald Bald Eagle incorporated within it. It is illegal to even pickup a bald eagle feather from the ground (except for Native Americans on Federally protected land). I think this carries a 25,0000$ fine.

 

[SteveWinwood]

If only there were a system that could handle disputes like this. Like an impartial person overhearing both cases and making a judgement.

If only.

 

[twobear]

Regardless of their wealth, valuing a piece that cannot be sold as being worth $65 million is ridiculous.

Why? Lots of things that 'can't be sold' are given values. Does the illegal sale of drugs come to a total value of $0?

 

[GK86]

Its unfair what those rich bastards are going through. Inheriting millions, and millions of dollars doing nothing. I wonder how they are coping.

 

[ReBurn]

Why? Lots of things that 'can't be sold' are given values. Does the illegal sale of drugs come to a total value of $0?

How is that even the same thing?

 

[TheExodu5]

Wait a sec...

How can the IRS tax property left to someone else in a will? That's absurd. I assume taxes would have to be paid if ever the pieces were sold to someone else, but in this case, no money is changing hands.