Sunday, July 22, 2012

"Priceless" artwork worth nothing or $65 million?

"What is the fair market value of an object that cannot be sold?" asks Patricia Cohen in a New York Times article about a masterpiece by Robert Rauschenburg. Cohen likens the question to a Zen koan, which is a statement or question used in Zen practice that often contains a paradoxical element.

But the more I read about the controversy that has erupted over the difference between the artwork's appraised value versus its tax value, the more it reminded me of a Catch-22. Joseph Heller's 1961 book was set in Italy during World War II. The term Catch-22 referred to government (military) regulations that involved circular reasoning to arrive at an impossible conclusion. Heller's satirical conceit so caught the imagination of the country that the term quickly entered the lexicon and is often used rather loosely.

However, it applies perfectly to the question of the fair market value of Rauschenburg's piece, which is called Canyon.
Canyon, Rauschenberg Estate/Licensed by VAGA, NY
As you can see, Rauschenburg included a stuffed bird in this example of one of what he called "combines" - a painting combined with assemblage. But that's not just any bird; it's a bald eagle, which is a federally protected endangered species. Because of that the painting, although legal to own, can never be sold. Therefore its appraised value is zero.

But the IRS demurs, says it's worth $65 million and expects a tax payment of $29.2 million!

You cannot sell - so says the government - so it's worth nothing; the same government demands taxes on a value of $65 million; but don't try to sell it to make the tax payment: Catch-22.

The fact that we're talking about a wealthy collector who could afford to make that tax payment doesn't change the principle, which potentially could be applied in cases that would financially ruin someone less fortunate. Or is this simply too unique a situation to make that case?

Is this another example of "big government" over-controlling personal and civil liberties? It's more complicated than that, of course. Read the whole article to get some of the nuances. But here's an appropriately cynical quote from Heller's book: "Catch-22 says they have a right to do anything we can't stop them from doing."

But wait! What was Rauschenburg thinking, I have to wonder, when he knowingly used a bald eagle in this work? Or Sonnabend, the art dealer/collector, who obtained the non-salable but highly valuable piece from the artist? Perhaps the (absent) monetary value deliberately was being pitted against or contrasted with inherent artistic value. It's an intriguing story any way you dice it. Priceless.

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