IRS Panel Says Donors Exaggerate Value of Artwork

The I.R.S.’s Art Advisory Panel has reviewed hundreds of pieces of artwork donated by taxpayers to charity and found, as always, that many people exaggerated the value of paintings, sculpture, and other items. In cases where the objects were left to heirs, however, many people placed too small a value on the objects.

Each year, a committee of art experts meets to review appraisals submitted by taxpayers who are under I.R.S. audit. The panel steps in when artwork with a claimed value of $20,000 or more is involved.

In its report for 1997, the art panel said that 29 per cent of 1,420 items in 128 cases that it had analyzed had been valued incorrectly. The committee agreed with taxpayers on 69 per cent of items and said 2 per cent needed further study.

The art panel recommended total adjustments of $57.2-million, including a 35-per-cent reduction in the value of items for which an excessive charitable deduction was claimed, and a 75-per-cent increase on undervalued items in estate and non-charitable gift appraisals.