Wealthy collector Ileana Sonnabend passed away in 2007, leaving a billion-dollar art collection to her heirs.¬† One of the works is a sculpture called ‚??Canyon,‚?Ě which turns out to be a very problematic inheritance indeed.
The New York Times describes ‚??Canyon‚?Ě as ‚??a masterwork of 20th-century art created by Robert Rauschenberg.‚?Ě¬† Unfortunately for the heirs to the Sonnabend estate, Rauschenberg‚??s masterful 20th-century creative process included the stuffed carcass of a bald eagle.
This means, under federal wildlife laws, it would be a felony offense to sell ‚??Canyon,‚?Ě although the U.S. Fish and Wildlife Service granted Sonnabend a special waiver to retain possession of the piece in 1981.¬† Its very existence is legal only because the artist was able to demonstrate that the eagle was dead long before the federal restrictions on killing them, or making use of their remains, were enacted.¬† (It turns out the eagle was killed by one of Teddy Roosevelt‚??s Rough Riders.)
However, the sale of an artwork incorporating a bald eagle carcass is still illegal, and the waiver for ‚??Canyon‚?Ě specifies that it must be forever on public exhibit.¬† It is current on a long-term loan to the Metropolitan Museum of Art.
Under the simplest exercise of common sense, this would leave ‚??Canyon‚?Ě with a practical value of zero dollars.¬† However, the IRS exercised different senses, and somehow computed a value of $65 million for the artwork.¬† It apparently doesn‚??t matter that at least three professional art appraisers hired by the family have agreed its real value is $0.00, because it cannot be sold.
This led the IRS to present Sonnabend‚??s heirs with a whopping $29.2 million estate tax bill for ‚??Canyon,‚?Ě based on a valuation that defies all of the long-established practices for considering fair market value.¬† The tax was assessed with a penalty rate, because the IRS claims the family has been inaccurately reporting the value of ‚??Canyon,‚?Ě by failing to agree with the fanciful value the government invented out of thin air.¬† The agency actually made an initial guess of $15 million, but raised it to $65 million after the family refused to pay taxes based on that value.¬† And this staggering tax bill is for an artwork the ‚??owners‚?Ě are obliged to leave perpetually in the hands of the public!
Well, it might be a little unfair to suggest the IRS was entirely arbitrary when it valued the property at $15 million‚?¶ er, excuse me, $65 million.¬† The Sonnabend family lawyer told the New York Times that an IRS executive once remarked that ‚??a recluse billionaire in China want might to buy and hide it,‚?Ě so a value could be extrapolated from there.¬† The family is probably lucky the IRS isn‚??t demanding its $29.2 million assessment be paid in yen.
The family has already sold off well over half of the billion-dollar art collection to pay their $471 million in federal and state estate taxes.¬† But they can‚??t sell ‚??Canyon,‚?Ě because if they do, a different department of the government that says it‚??s worth $65 million will arrest them.
Well, they could always get out of trouble by donating the artwork to a charity, right?¬† Not so fast.¬† They‚??d still owe $40.9 million in taxes and penalties right now, and it would take them 75 years to claim the full value of ‚??Canyon‚?Ě through tax deductions.¬† It‚??s an American masterwork, but it‚??s unleashed a bureaucratic nightmare straight out of Kafka.