IRS Offers New Deal on Evaluating Art

By Robert D. Hershey, Jr. | THE JOURNAL RECORD, February 21, 1995 | Go to article overview

IRS Offers New Deal on Evaluating Art


Robert D. Hershey, Jr., THE JOURNAL RECORD


For people who donate valuable works of art, the Internal Revenue Service is proposing a new deal: For $3,000 it will tell you before you file your income tax return exactly how big a tax deduction you can take.

Is this a case of no good deed going unpunished? Not at all, specialists say. Most of the philanthropic minded will probably consider the offer a bargain.

Under current practice, valuation is the responsibility of the donor, who must attach a summary of a qualified appraisal to a tax return for any item worth more than $5,000.

The IRS gets involved _ asking its panel of 25 volunteer experts to review the claim _ only in case of an audit and only if the art is worth $20,000 or more.

The proposed change, spurred by Congress, is aimed at reducing taxpayer uncertainty and the delay that commonly occurs between the time donors submit an appraisal and the time they are assured that the IRS does not disagree.

"Taxpayers have to wait so long to find out what's going to happen," often two or three years, said Karen Carolan, chief of the IRS Office of Art Appraisal Services.

The new plan, about which the agency is considering public comment until March 10, will not be available for use by this year's deadline, April 17, though it could be in place for taxpayers who file extensions.

Under the plan, the agency would provide valuations for as many as 10 paintings, manuscripts or other works of art for a $3,000 fee, the same charge for other kinds of private rulings. Each piece must be worth at least $50,000 and already donated to a museum or other charity.

Because auction houses or other private experts typically command $1,000 to $2,000 to value a work of art, the IRS could be the thrifty way to appraise a group of works worth up to $500,000 in tax deductions.

The IRS said it would use its experience with valuing art for income tax deductions to help create a similar prefiling program for valuing art for estate tax purposes, where the timetables are different and where the taxpayer seeks a minimum value rather than a maximum one. …

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