May 3, 2007 | Read Time: 1 minute
The Internal Revenue Service has recalculated the value of hundreds of pieces of artwork for which deductions were claimed by taxpayers who donated them to charities or left them to heirs.
As it has in the past, the advisory panel found that many people exaggerated the value of paintings and other items contributed to charities and placed too small a value on objects left to heirs. Each year, a committee of art experts meets to review appraisals submitted by people the IRS is auditing.
The committee steps in when a taxpayer says a work is worth at least $20,000.
In its report for 2006, the art panel said that 61 percent of 1,638 items in 124 cases had been valued incorrectly. The committee agreed with taxpayers on 38 percent of the appraisals; 1 percent needed further study.
Taxpayers had claimed a total value of $219-million for the items, the vast majority of which were estate and noncharitable gifts to heirs. The art panel recommended total adjustments of more than $126.5-million. That figure included reducing the value of some items, and increasing the value of items deemed undervalued.
A copy of the Art Advisory Panel’s report is available online.
