Contemporary Curated makes $36.8m on $7.3m Kerry James Marshall painting and $2.6m Jack Whitten; Marc Benioff Doesn’t Want Your Tax Deduction.
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Sotheby’s mid-season Contemporary sale totaled $36.8m, building upon the $30.8m the same sale pulled in last September and the $26m from a year before. As with September, one of the top lots was a Kerry James Marshall work. But this time it was painting that ignited a prolonged all-hands bidding war that resulted in a $7.3m price that was nearly triple the high estimate. The five-times-the-high-estimate sale of Jack Whitten’s $2.6m Special Checking was very special indeed. Alice Neel’s Connie—bid upon and won by Amy Cappellazzo—also showed the sale’s organizer, Charlotte Van Dercook, was right to declare the painter undervalued.
The New York Times Fantasizes About the IRS
The culture editors at the New York Times generally express their animosity toward the art market by suggesting art prices are bubble. This week, they took a run-of-the-mill story about a rich person possibly buying a fake and turned it into a fantasy involving the IRS.
Salesforce.com’s Marc Benioff bought what many believe is a Hawaiian carving for $7.5m and donated it to a museum on the archipelago. There are significant holes in the provenance (all of which was made public during the sale process) which has bolstered the doubts at least one dealer has about the work’s authenticity.
Normally, the Times would have happily embarrassed Benioff by publicizing the doubts and left the matter there. Instead, the paper took a strange turn. They invented a tax deduction that Benioff might have taken (with no evidence that he did) before determining that the donation Benioff did make was probably not eligible for any deduction.
If that wasn’t enough, the Times then went on to imagine that the IRS is capable of acting as an arbitrator of authenticity claims. Here’s the relevant passage:
- “The issue could be given closure if Mr. Benioff were to claim a charitable tax deduction for his $7.5 million donation to the Bishop Museum. Having been bought at auction for more than $50,000, the sculpture would have to be appraised by the I.R.S. Art Advisory Panel, which would recommend a true market value.“The I.R.S. generally won’t accept an auction receipt as an appraisal,” said David Shapiro, a senior appraiser at Victor Wiener Associates in New York. “The I.R.S. requires an appraisal, and at this level the Art Advisory Panel will take a good look at it. Values of an ethnographic artwork can be wildly different if there are doubts about it.”But Mr. Shapiro also pointed out that donated artworks generally qualify for significant tax deductions only if they have been owned by a collector for at least a year. This was not the case with Mr. Benioff’s Hawaiian sculpture.”
What’s weird here is that despite what David Shapiro says, this is not what the IRS panel does. The Times would know that if it had bothered to read its own links. The Benioff story cites a Washington Post story on the IRS panel that explains—in clear language—that the panel doesn’t second guess sales. “When an artwork is sold outright, the Internal Revenue Service needs no help in determining how much to tax,” the Post tells us. “It has the purchase price and the sale price and it knows how to subtract.”
The panel is only brought in when there is a taxable event—a donation or inheritance—that is remote from a sale. “Sometimes the owners of an artwork want an estimate of what they owe Uncle Sam before they file their tax returns” the Post says. “Other times, the owners have already filed and are either challenging their tax bill or have been audited by the IRS.” When the taxpayer and the taxman can’t settle their differences, that’s when the IRS brings in their panel of wise men and women. There’s no evidence the sale of the statue, which required an underbidder to help determine the price, is questioned by anyone.
Moreover, if the Times thinks the Art Advisory panel is some all-seeing, all-knowing body, it should also read its own reporting on Robert Rauschenberg’s Canyon. Ileana Sonnabend’s heirs spend years fighting the panel’s $65m valuation of that painting. Did they want to avoid paying taxes? No. The painting contained a stuffed golden eagle which is an endangered species. It could not be sold under any circumstances without violating Federal law. Nevertheless, the IRS wanted the heirs to pay millions in tax on it.
When asked how they came up with the figure, the head of the panel said they valued the painting on artistic merit. “It’s a stunning work of art,” she said, “and we all just cringed at the idea of saying that this had zero value.”