Estate Tax Value of Paintings Determined (E. Kollsman Est., TCM)

CCH Tax Day Report

The value of two paintings was calculated based on an expert’s report and applying appropriate discounts to reflect the condition of the paintings. The decedent died in 2005, owning a painting referred to as “Maypole” by Pieter Brueghel the Younger, and a second painting referred to as “Orpheus” by Jan Brueghel the Elder, Jan Brueghel the Younger, or a Brueghel studio. Prior to auctioning the paintings, the executor had both cleaned and re-framed. Nearly three years after the decedent’s death, Maypole sold at auction for a total purchase price, including the buyer’s premium, of $2.43 million. Orpheus was not sold. On the estate tax return, Maypole was valued at $500,000 and Orpheus at $100,000, based on an expert’s opinion after his inspection of the paintings. The government contended that Maypole and Orpheus were valued at $2.1 million and $500,000, respectively.

The opinion of the estate’s expert was rejected as unreliable and unpersuasive for several reasons. First, the expert was simultaneously providing a valuation for estate tax purposes and soliciting the executor for the exclusive rights to auction the paintings, which created a conflict of interest. Secondly, the expert overemphasized the dirtiness of the paintings and the risk of cleaning them on the valuation date. Also, a willing buyer would have reasonable knowledge of the condition of the paintings and would have sought additional opinions on their condition and the risk in cleaning them. Further, the expert offered no comparable sales to support his valuations. Finally, the post-death sale was probative of Maypole’s date-of-death value.

The government’s expert examined sales of paintings similar to Maypole and concluded that a 1997 sale of a painting similar in size and composition was most comparable. Although not addressed by the government’s expert, a discount to account for the painting’s condition and risk in cleaning was applied. On the assumption that Orpheus was painted by Jan Brueghel the Elder, the government’s expert identified sales of comparable works and estimated a fair market value based on the size of Orpheus in relation to the comparable paintings. Recognizing the dispute in attribution, works by Brueghel the Younger were also examined, which resulted in a lower value. Because the government offered evidence for attributing Orpheus to Brueghel the Elder, the higher valuation of $500,000 was accepted, with discounts applied for the painting’s dirtiness, bowing on the valuation date, and to account for the attribution dispute.

E.F. Kollsman Est., TC Memo. 2017-40, Dec. 60,844(M)

Other References:

Code Sec. 2031

CCH Reference – FINH ¶3125.32

CCH Reference – FINH ¶3415.25

Tax Research Consultant

CCH Reference – TRC VALUE: 21,202



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