Comments on: When museum curators confuse price and value http://blogs.reuters.com/felix-salmon/2012/07/23/when-museum-curators-confuse-price-and-value/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: Neil_McGowan http://blogs.reuters.com/felix-salmon/2012/07/23/when-museum-curators-confuse-price-and-value/comment-page-1/#comment-41985 Mon, 23 Jul 2012 20:00:27 +0000 http://blogs.reuters.com/felix-salmon/?p=16379#comment-41985 “There are people who know the PRICE of everything, but the VALUE of nothing”. (Oscar Wilde)

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By: realist50 http://blogs.reuters.com/felix-salmon/2012/07/23/when-museum-curators-confuse-price-and-value/comment-page-1/#comment-41978 Mon, 23 Jul 2012 17:35:50 +0000 http://blogs.reuters.com/felix-salmon/?p=16379#comment-41978 I think that a value of $0 is difficult to justify, but ignoring all restrictions on sale flies in the face of how the IRS values other assets. It’s well-established that in valuing stock, legal restrictions on transfer – such as a stockholders’ agreement that grants someone else purchase rights (e.g., some sort of right of first refusal to match any agreement to sell the shares to a 3rd-party) – are a basis for discounting the value of stock. The value can’t be discounted as low as $0, but the percent haircut can be significant. To take another example, would the IRS say that the zoning on a plot of land is irrelevant to value, because one could build illegally? In all of these cases, like with the eagle, the ultimate enforcement is the threat of criminal law – i.e., if I willfully ignore a civil court judgement related to stock transfers or zoning, the choice I’ll eventually face is to comply or have a judge throw me in jail for defying a court order.

I therefore don’t think that the value of this work should be $0 for estate tax purposes, but it should be a dramatic discount – my gut is an over 50% discount – to the “value without reference to any accompanying restrictions or laws” cited by Ms. Barron.

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By: FifthDecade http://blogs.reuters.com/felix-salmon/2012/07/23/when-museum-curators-confuse-price-and-value/comment-page-1/#comment-41977 Mon, 23 Jul 2012 17:20:42 +0000 http://blogs.reuters.com/felix-salmon/?p=16379#comment-41977 Thanks bobmich, I did think it was a painting. High value art clearly isn’t my thing! (I do however think the next bust we are going to see will be in this sector – there are definite signs of an asset bubble forming).

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By: hubcapjr http://blogs.reuters.com/felix-salmon/2012/07/23/when-museum-curators-confuse-price-and-value/comment-page-1/#comment-41976 Mon, 23 Jul 2012 16:59:07 +0000 http://blogs.reuters.com/felix-salmon/?p=16379#comment-41976 “expect to see lots of endangered species added to ‘priceless’ works of art in order to avoid the taxes”
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Of course that won’t happen because doing so would be hugely illegal, and would land the artist/heirs/whomever did that in jail.

Not to mention that what matters here is not just any any endangered species, but a bald eagle, which has a whole act (the 1940 Bald and Golden Eagle Protection Act) devoted to it.

And if you read the actual article, you’ll learn that Rauschenberg and Sonnabend had to go through all sort of hoops just to be allowed to possess and display ‘Canyon’.

So I doubt “stick a snail darter on it” will be a very promising strategy for future estate tax avoidance.

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By: njnnja http://blogs.reuters.com/felix-salmon/2012/07/23/when-museum-curators-confuse-price-and-value/comment-page-1/#comment-41972 Mon, 23 Jul 2012 15:33:25 +0000 http://blogs.reuters.com/felix-salmon/?p=16379#comment-41972 Of course the work has monetary value, regardless of laws preventing the legal sale of the object. You don’t hear about drug busts where the police recover 500 pounds of cocaine with a street value of worthless. Let’s say that they did sell it, somehow, and $50 million dollars showed up in their assets. Does the IRS not get capital gains on that because they didn’t really sell it – after all it would be illegal to do so.

The black market is still a market where people can, and do, exchange goods and services for dollars. Just because the work can only be sold on the black market doesn’t make it have zero monetary value.

If this work has no monetary value, expect to see lots of endangered species added to “priceless” works of art in order to avoid the taxes (and if endangered species trafficking carries too long a prison sentence, I’m sure they will find something else that is illegal to sell, but carries only a nominal fine, to make the same argument).

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By: dWj http://blogs.reuters.com/felix-salmon/2012/07/23/when-museum-curators-confuse-price-and-value/comment-page-1/#comment-41970 Mon, 23 Jul 2012 14:29:31 +0000 http://blogs.reuters.com/felix-salmon/?p=16379#comment-41970 Barron is making the mistake because she has no grasp of “financial value” is; Meyer is making the mistake because he has no grasp of “artistic value”.

After 9/11 the federal government paid money to the families of many of the survivors based on a formula that was supposed to determine need; a woman whose husband had life insurance and therefore received nothing told the administrator of the fund (at a public meeting) that she felt insulted, as if she was being told that her husband’s life had no value; the administrator sat silent. He should have jumped out of his seat, and assured everyone, no matter how much they were receiving, that he didn’t believe that any amount of money would replace their loved ones, and that they should not imagine that it was possible to financially value their loved ones’ lives; the money was only based on what money could do.

While art isn’t human life, a similar confusion seems to be at play here. Money can do what money can do, and that is pretty well limited things that are connected to markets and transactions. A government price control wouldn’t change the artistic value of the artwork, even if it affected market prices. A government ban on sales doesn’t affect the artistic value of the artwork, but it very much does affect whether inheriting the artwork enhances the heirs ability to pay taxes — the effect is that it does not.

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By: josephbothwell http://blogs.reuters.com/felix-salmon/2012/07/23/when-museum-curators-confuse-price-and-value/comment-page-1/#comment-41968 Mon, 23 Jul 2012 14:11:49 +0000 http://blogs.reuters.com/felix-salmon/?p=16379#comment-41968 So, artistic value and financial value are NOT linked? I realize many people overpay for bad art, but the idea that great art has zero monetary value is just silly.

Having said that, there are interesting issues in this case. I invite all to read Robson v. Commissioner, Tax Court Memo 1997-176. Also, the tax code sections relating to estates and to charitable contributions. By law, IRS uses the same value for both estates and charitable contributions, although many like to think of the former as wholesale and the latter as full retail. The Robson case makes it clear that a market has to exist, not necessarily that one has to have legal access to that market. As everyone knows, there is a strong market for good quality contemporary art. Beyond that, I do think it would be useful for the Court to clarify the issue of access to a market, and just how hypothetical an appraisal is.

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By: bobmich http://blogs.reuters.com/felix-salmon/2012/07/23/when-museum-curators-confuse-price-and-value/comment-page-1/#comment-41967 Mon, 23 Jul 2012 14:06:02 +0000 http://blogs.reuters.com/felix-salmon/?p=16379#comment-41967 FifthDecade misunderstands the nature of the work (which wasn’t all that clear in the article). It doesn’t have a picture of a bald eagle, it has a real, stuffed bald eagle. See for example
http://www.flickr.com/photos/generatorrr  /6886183464/

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By: FifthDecade http://blogs.reuters.com/felix-salmon/2012/07/23/when-museum-curators-confuse-price-and-value/comment-page-1/#comment-41965 Mon, 23 Jul 2012 12:49:55 +0000 http://blogs.reuters.com/felix-salmon/?p=16379#comment-41965 Why is it illegal to sell it? I’m sure dealers in Europe would be happy to sell a picture with a bald eagle in, after all, it’s just another bird for heaven’s sake!

I have to say banning the sale of items with a picture of a bald eagle on is the silliest most ridiculous idea I’ve heard this year – and that includes April 1st!

ROFLMAO!

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By: TFF http://blogs.reuters.com/felix-salmon/2012/07/23/when-museum-curators-confuse-price-and-value/comment-page-1/#comment-41964 Mon, 23 Jul 2012 10:41:59 +0000 http://blogs.reuters.com/felix-salmon/?p=16379#comment-41964 Is it necessary to get Congress involved? A very simple common-sense solution: have the work donated to the museum and declared exempt from the estate tax. I’m sure it is quite valuable (especially since it can’t be bought), but the whole situation is insane.

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