Holding artworks as part of an estate raises a number of considerations when it comes to transfer, taxation, and control. -Matthew Erskine, Familly Wealth Report July 27, 2020
Lobus recently reported that across three art sales and 62 lots, Sotheby’s totaled $364.9 million against a projected low estimate of $262.2 million; Sotheby’s November Evening Sales saw a combined $479.6 million across 88 lots sold. Key highlights of the evening included record sales for Francis Bacon, Helen Frankenthaler, and Matthew Wong. Upcoming sales include Phillips Evening Sale with a low estimate of $29.4 million across 25 lots, and Christie’s with a low estimate of $379.1 million across 82 lots. Although there are no facts to back up the assumption, the report suggests that the art market is not correlated to the stock market, and in some genres, the prices will continue to climb. Whether art is or is not correlated to stock market returns, it is worthwhile to know how art is valued for estate and gift tax purposes.
It’s all about the appraisal
The core issue of most disputes on the valuation of art is the failure to prepare the appraisal correctly. The appraisal must comply with the requirements of the Uniform Standards of Professional Appraisal Practice (USPAP) and the Art Advisory Panel of the IRS (Panel). Doing so lays the groundwork for a successful defense of a collection’s value in the determination of tax liability. Specifically, the appraisal should do three things: shift the burden of proof; use the correct discounting methods; and include the impact of clouded title to the artwork.
See Matthew’s advice in Family Wealth Report about four additional considerations for your art and read the full article here: https://www.fwreport.com/article.php?id=188088&page=1#.XyDf_y-z0lI