The kids of a wealthy American art dealer inherited an important artwork by famous American painter Robert Rauschenberg. However, as the work, titled ‘Canyon,’ incorporated a stuffed federally protected Bald Eagle, the heirs would be committing a felony by selling it. The heirs’ parent was only allowed to own the painting due to special permission from the US Government, testimony from Rauschenberg that the stuffed eagle dated to long before the 1940 bald eagle law and upon the promise that the artwork be displayed publicly. It is shown at Metropolitan Museum of Art in New York
As the work could not be sold, the owners’ appraisers and Christies auction house appraised its market value as zero. The philosophy behind the appraisal that the value was what it would sell for on the market, and if it could not be sold it had no market value.
The Internal Revenue Service took a different view. It has a board of art experts that appraises art for tax purposes, and they valued the painting as worth $65 million. The IRS accepted the valuation and told the painting’s owners to pay $29.2 million in taxes!
It’s important to note that the IRS’ board of experts said they calculated the $65 million value by comparing it to the sale prices of similar items on the market, and did not take into consideration any laws that would prevent from the sale. Also, one of the experts said that, even with the law, it didn’t make any sense to her to valuate it at $0.
So, what do you think is the painting’s financial value?