IRS Wants $29 Million for Artwork That Can’t Be Sold

The heirs of New York art dealer Ileana Sonnabend have been placed in quite the quandary.  They have inherited a work of art that cannot legally be sold — but the IRS claims that they owe $29 million in taxes based on their appraised value of the work.

Robert Rauschenberg was an American artist known for his unique  “combines,” in which he put together various objects, often to accompany paintings.  The work at issue here, Canyon, included a stuffed bald eagle.  Sale of a bald eagle is illegal under federal law.  Indeed, possession of a bald eagle, alive or dead, is a violation of the Bald and Golden Eagle Protection Act, but a waiver was obtained for this work years ago because it was shown that the eagle was killed before the law went into effect.

Because of that law, it would be illegal for the heirs to sell the work.  But the IRS’s Advisory Law Panel put a valuation of $65 million on the work, allegedly because it could, in theory, be sold on the black market.  That appraised value created a tax bill of more than $29 million.

The ruling has been challenged in tax court, and we will continue to follow this matter.

If you would like more information, please write to Mike Bono at mbono@wcmlaw.com