Category Archives: value
What’s It Worth: Valuing Ivory in an Era of Regulation
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What’s It Worth: Valuing Ivory in an Era of Regulations
In this helpful article, Richelle Simon, ISA, guides the appraiser and the collector through the legally complex ivory market. Valuation or advising on the possible sale of objects made of ivory and other endangered species requires research of the object’s provenance, documentation of when and where the object was acquired, and authentication. It also requires careful consideration and understanding of the numerous domestic and international regulations on the books since the 1970s. Read on for details:
What’s So Bad about Auction Houses Preparing Appraisals for the IRS? A Recent Case
In the recent case (February 22, 2017) of the Estate of Kollsman v. Commissioner, the U.S. Tax Court ruled that the estate had significantly underreported the value of artworks to the IRS for estate tax purposes. The court found that the values were unpersuasive because the auction house specialist who had prepared the appraisal was found to have exaggerated the poor condition and risk of cleaning the Old Master paintings under consideration. More importantly, the auction specialist who produced the appraisal report was, at the same time, soliciting the works for consignment, which could result in significant commissions from the sale. Not surprisingly, the court found that the auction specialist had a significant conflict of interest in preparing the appraisal report stating: “he had a direct financial incentive to curry favor with [the executor]” by providing “‘lowball’ estimates that would lessen the Federal estate tax burden borne by the estate.”
Collectors, estate administrators and fiduciaries should be aware that to reduce the risk that an appraisal prepared for Estate Tax calculation or Charitable Contribution will later be deemed unreliable, independent appraisers who have no financial interest in the property should be retained. When hiring an appraiser look for an appraiser who prepares appraisal reports in compliance with the Uniform Standards of Professional Appraisal Practice USPAP, the generally recognized performance standards for the appraisal profession in the U.S.. All reports conforming to USPAP include a certification that the opinions expressed in those reports are the appraiser’s unbiased professional opinions, and that the appraiser has no present or prospective interest in the property being appraised or personal interest with respect to the parties involved (or if such interests exist, they must be disclosed).
What’s My Art Worth?
In a sign of the times, one of the most frequent queries that we get these days goes something like this: “I was given (inherited, won) a print or painting, sculpture by “John Smith” (or, I don’t know who the artist is but it looks really old) and am curious about what it is worth because I’d like to sell it. Can you help me?”
Before we can answer that question, there is some key information that we need in order to determine if we can help you or, if you have something that is worth an appraiser’s standard fee of upwards of $150 an hour.
Is it original?
By original we mean, is it a unique oil/acrylic/watercolor/drawing or sculpture that is signed by an artist? If you are not sure and if it is in a frame, examine it out of the frame.
Who is the artist?
Look for a signature on the front or the back of the painting, or, if it is a sculpture, on the base. Another reason to take a print or painting out of the frame is that there may be a gallery label on the back identifying the artist, title, date and even price.
What are the dimensions?
Height and width of a two-dimensional work, height, width and depth if a three-dimensional work.
What is the history of ownership?
Where did you or the person from whom you received the artwork acquire the piece? If you don’t know, look for any old appraisals, invoices or certificates.
What is the condition?
The condition of the artwork usually has a significant impact on value. Look for rips, holes, insect infestation, fading, toning, water damage etc… Again, this is another reason to remove an artwork from the frame. Oftentimes artwork that has been in the family for decades has never been reframed, consequently the piece has become degraded due to over-exposure to light, or from non-archival acidic backings.
Do a quick google search with the artist’s name to see if he or she pops up. Or go to one of the fine art databases to see if your artist has enough of a market to be included.
Finally, it is important to understand that the value of an artwork varies according to the purpose of the appraisal. The value assigned to a work for insurance purposes is Replacement Value, typically what you would pay at a gallery. The value assigned to an artwork for donation, estate tax or sales purposes, is known as Fair Market Value, defined by professional appraisal organizations as what a willing buyer and a willing seller would agree is a reasonable price in the open marketplace, usually the auction market.
