Barron’s has some interesting data on the IRS’s revisions of tax appraisals during the years the art market seemed to go straight up as most of the economy remained frozen in the aftermath of the credit crisis.

Unfortunately, the tide in the art market has receded somewhat but it isn’t clear that the IRS and its board of advisors have throttled back their revisions. The good news is that many of these revisions were based upon actual sales:

From 2011 to 2014, the IRS raised appraisals for estate- and gift-tax returns and lowered those for charitable deductions—both moves resulting in higher tax burdens—on 41% of the total 1,394 appraisals that it reviewed. In 2014, 58 out of the 159 estate appraisals the IRS panel scrutinized were increased from a total of $36.3 million to $66.8 million, an eye-watering 84%.

Penalties are 20% of the amount underpaid, when appraisals are 65% or less of what the IRS thinks they should be. The penalty doubles to 40% if the valuation is 40% or less of the IRS’.

How Art Can Blow Apart Your Estate  (Barron’s)