Ralph E. Lerner’s “Valuing Works of Art for Tax Purposes”
Summary: In this article, Ralph E. Lerner discusses how to correctly and accurately value works of art in order to properly assess the necessary taxes to be paid, or deducted.
Excerpt: Most people are collectors of one thing or another, and the number of people who are serious collectors with valuable collections is growing rapidly. In fact, paintings, stamps, coins, and other items of tangible personal property have increased in value at a much greater rate than have most stocks and bonds. As those collectibles increase in value, the estate planner must give them greater attention. Planning for the collector’s lifetime and testamentary disposition of tangible personal property to charitable organizations was made increasingly complicated as a result of numerous changes in the tax law, beginning with the Tax Reform Act of 1969, continuing through the Economic Growth and Tax Relief Reconciliation Act of 2001, the Jobs and Growth Tax Relief Reconciliation Act of 2003, the Pension Protection Act of 2006, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, and forward, with each year’s tax act containing new and complex provisions. It seems that hardly a year goes by without some new and arcane legislation to confuse collectors. The problems are complicated by the fact that in most cases items of collectible tangible personal property (hereinafter called “the collection”) are unique and difficult to value. Not knowing the value of the collection complicates the planning for its disposition.