Appraisals And Revenooers (June 1966 | Volume: 17, Issue: 4)

Appraisals And Revenooers

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Authors: Ralph G. Newman

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June 1966 | Volume 17, Issue 4

Iam writing about a subject which in the past has not ordinarily been discussed in public, but the time has come for a public airing of it. Many librarians, collectors, curators, and dealers are called upon in the normal course of day-to-day activities to place a value on a letter, a manuscript, or a book, or on a collection of such items. And on occasion they are required to prepare a document to satisfy the whims of Internal Revenue Service examiners.

This is simply “appraising,” but of late the word seems to indicate to many not the science of placing a true, current, acceptable value on an object, but part of a complex game of wits whose ultimate objective is to confuse, baffle, or outwit one or several exceedingly curious individuals in the Treasury Department. I shall cite a few dangerous examples.

John Smith, a collector, donates an item for sale to an accredited organization accepted by the Revenue Service as qualified to receive gifts on a tax-exempt basis. The institution or organization runs an auction at which the item is sold for f 1,000. Mr. Smith, therefore, takes a deduction from his income tax in that year of $ 1,000 as a gift to an educational, charitable, or religious institution. The buyer, Tom Brown, makes his check out to the institution as a cash gift, assuming that the item he receives is merely a token; or, if you have a suspicious mind, he assumes the government won’t know the difference. Deduction No. 2 for $1,000. Mr. Brown then turns around and makes a gift of the item to another institution, taking another f 1,000 deduction, since there now exists a record that the item sold for this amount.

Three deductions of $ 1,000 each, and all involving a single item! Now what’s wrong, even if the Revenue Service doesn’t find out? Deduction No. 1, that of the donor, John Smith, is legitimate. He gave his property, and the sale of the item brought $1,000 to the receiving institution. Deduction No. 2, that of the buyer, Tom Brown, is not legitimate. He received something for his money. He could, however, have elected not to accept the item, in which case his check would have been a gift and his deduction legitimate. If he did accept the item, his first deduction was not legal, but the deduction for his gift of the item to another institution was. So that while three deductions for the same transaction cannot be allowed, apparently two are legal. Some of our friends in the Revenue Service are going quietly mad in an effort to discover how legally to cut the deductions to one.

The example just cited was a quasi-legal operation. Now contemplate this one: John Smith has a collection of papers. Let us say they are his own, accumulated during seven less-than-earthshaking months as ambassador to Mali and consisting in the