August 6th, 2012 by Associate
Have you ever tried to sell an item, but realize it has no legal value in today’s market place? I’m sure this happens quite frequently when someone inherits an old item with no use, like your grandmother’s gravy boat. Can you imagine if that worthless item causes you to receive a $29 million tax bill from the IRS? In 2007, when New York Art Dealer Ileana Sonnabend died, her children inherited a piece of art known as Canyon by Robert Rauschenberg. This in itself is not an unusual occurrence, but due to the contents of the sculpture, it’s created a huge issue accompanied by a huge tax bill.
The sculpture contains a stuffed bald eagle, which makes it a felony to sell under the federal bird protection laws. Therefore, the appraisers valued the artwork at zero and the family is unable to sell. The IRS, on the other hand, has a different idea on the artwork’s value; try a $65 million different idea. The Sonnabend heirs have inherited artwork in the past, but sold it in order to pay the tax bills. The issue is now being handled in the U.S. Tax Court, and if the IRS prevails, the children are looking at a $40.9 million payout of taxes and penalties. This type of situation is obviously rare and unusual, but it’s something to consider if you’re the type of individual who could inherit/purchase rare objects such as this.