[HN Gopher] The Sotheby's trial revealed the art market's unsavo...
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The Sotheby's trial revealed the art market's unsavoury practices
Author : testrun
Score : 43 points
Date : 2024-02-04 11:15 UTC (2 days ago)
(HTM) web link (www.economist.com)
(TXT) w3m dump (www.economist.com)
| wslh wrote:
| https://archive.is/2024.02.05-112410/https://www.economist.c...
| BugsJustFindMe wrote:
| I have a hard time caring about billionaires paying too much for
| paintings.
| raziel2p wrote:
| I understand this sentiment, but I worry that the people
| ripping off billionaires aren't exactly giving back to society
| either.
|
| Sometimes I ponder about business opportunities catering to the
| upper end market, making things ridiculously expensive just to
| capture the super rich segment, and using the profits for good
| in society (somehow).
|
| Most people/businesses don't operate like this I suppose - they
| just want a yacht of their own, or to infinitely grow their
| business.
| guhidalg wrote:
| Or we could, you know, just tax them and achieve the same
| thing.
| saalweachter wrote:
| I think the best you're going to do is to start some sort of
| workers-owned crafting shop that pays well, provides a
| pension, and has a company culture of doing just absolutely
| everything possible in house and with minimal automation.
| Machine the screws that hold the widgets together in house,
| laminate your own plywood from wood species chosen and grown
| and milled in house.
|
| The idea is to create a ton of good paying jobs that range
| from artisans and artists to mindless make-work, while
| creating a lot of cachet for finely crafted items with just
| _absurd_ price tags.
| iamacyborg wrote:
| You've basically described Hermes and Loro Piana.
| pavlov wrote:
| There's a lot of small luxury companies around the world.
| Watchmakers in Switzerland, champagne houses in France,
| tailors in England, yacht builders in Finland... Even
| though the products are expensive, their margins aren't
| as insane as it might appear because the manual
| production truly is expensive and the workers are often
| lifers who are treated very well.
|
| A lot of these businesses do end up being absorbed by the
| big players like LVMH which grew into the most valuable
| company in Europe through decades of acquisitions. (The
| company's official name, LVMH Moet Hennessy Louis
| Vuitton, is itself suggestive of a merger between luxury
| players in unrelated markets.)
| iamacyborg wrote:
| Sure but I'm specifically talking about two examples
| that've done an incredibly good job of vertical
| integration.
|
| I can't think of a Swiss watch company that's operating
| it's own mines and metalworks, for example, or a British
| Saville Row tailor that also owns the herds and the looms
| to make the cloth it then turns into clothing. Both
| Hermes and Loro Piana on the other hand do this (LP is
| owned by LVMH).
| pavlov wrote:
| Ah, I see.
|
| Some small luxury brands have local, very long-term
| supply chain relationships that effectively offer the
| same benefits. As in, maybe the hypothetical Finnish
| maker of bespoke sailboats buys all their wood from the
| same sawmill (ever since 1935 when the founders of the
| two companies went hunting in the forest where the wood
| still comes from).
|
| But of course only some materials can be sourced like
| this. A watchmaker and a mine are not in the same
| industrial league.
| saalweachter wrote:
| You might not be able to mine, but you could smelt at a
| much smaller scale. You could smelt your own alloys from
| all sorts of fancy recycled materials -- steel from
| warships, chrome from classic automobiles, etc etc.
|
| The goal is basically to do things that sound impressive
| to justify absurd prices while employing as many people
| possible in as good of conditions as possible.
| iamacyborg wrote:
| > The goal is basically to do things that sound
| impressive to justify absurd prices
|
| I wouldn't be quite so cynical about it, ultimately it's
| about having full control over the quality of the
| finished product. The material used in a Loro Piana
| cashmere sweater is on a different level to a fast
| fashion cashmere sweater, despite them both being
| "cashmere".
| iamacyborg wrote:
| Yeah there are certainly some industries that lend
| themselves to this more than others.
|
| For example, it makes sense for Loro Piana to own
| Cashmere goat herds so that they can have the best
| possible supply of cashmere for their knitwear.
|
| Hermes own cattle farms for the same reason, they can
| remove things like barbed wire from their fields which
| can cause damage to the finished product.
|
| Goat and cattle herding aren't yet an industrial process
| like making certain grades of steel or making glass
| bottles (for the champagne producer) though, so while it
| makes sense for vertical integration in some areas, it
| might not in others.
| indigochill wrote:
| I can think of a couple people I know who work in high-end
| manual work but they both work effectively alone. One does
| old-school illumination and another makes expensive
| handmade watches. Both are what would probably qualify as
| "master craftsmen" both in the sense that they're at the
| top of their game in their field and that even if they
| don't necessarily have people working under them (one does,
| the other doesn't) they at least are both passing on their
| knowledge (the one who doesn't have employees still teaches
| a class for others to learn illumination).
|
| I'm not sure this is the sort of thing that lends itself
| well to vertical integration due to the radically different
| set of skills required and maybe most critically, low
| volume of the final product. For example, making high-end
| ink has entirely different skill and material requirements
| from making high-end illuminated pages. But someone who
| makes high-end ink can produce in much higher volume than a
| single illuminator requires (not to mention it takes more
| than just ink). Likewise for watchmaking, the manufacturing
| of most of the parts can be generalized and scaled up while
| any individual watchmaker only needs so many gears and
| springs and such.
| saalweachter wrote:
| Fair enough, re: vertical integration and the need for
| specialized skills that produce in too high a volume.
|
| But the goal _isn 't_ really to scale up -- you want to
| consume as much labor as you can and charge the rich
| through the nose for it. If you need to employ dozens of
| spinners who can only spin for four hours a day to avoid
| repetitive stress injuries to supply a single weaver to
| make your upholstery fabric for your high end couches,
| great, charge hundreds (thousands?) of dollars a yard for
| the material. They'll pay for the privilege of sniffing
| at the less rich whose furniture is upholstered with
| fabric spun by a machine.
| yieldcrv wrote:
| that sentiment dissipated for me when I was willing to
| acknowledge how financial services that are more universally
| respected are not fundamentally different from "billionaires
| paying too much for paintings"
|
| all markets have the same human behaviors in them, all markets
| have degrees of opaqueness that get taken advantage of the same
| way, all markets that have transparency have it in response to
| the same behaviors, all market participants are subject to a
| liquidity problem and sustaining a balance that grows faster
| than the issuance of the currency they use, which brings me to
| the next point:
|
| billionaires saving is worse for your life than billionaires
| spending. help people spend and your economy grows. this isn't
| a trickle down praise, in fact its the opposite, assume it wont
| magically trickle down to you as motivation to personally help
| them spend with a 54% markup
| BlueTemplar wrote:
| Excluding (super) rich people from society is only going to
| make things worse for everyone.
| ionwake wrote:
| I cant fathom what it would be like to just turn a profit of 10
| million on one trade. I mean, you could just give 10% to everyone
| you care about and their lives would be changed forever.
|
| Yeah I know some of you reading this will have much more, but I
| personally, can't fathom doing it just once, imagine, just for a
| days work.
| appplication wrote:
| $1M would change your life less than you think. It would help
| provide some cushion but I don't think there are many actual
| lifestyle changes that alone would enable.
|
| Invest that, at safe withdrawal of 4%, that's only 40k/year. I
| live in SF, and making less than $105k/year is considered low
| income (according to California's Department of Housing and
| Community Development). So yeah it's a nice boost to savings,
| but you can't stop working.
| ionwake wrote:
| I dont mean any disrespect, I apprecaite your input, but I
| thought someone making 6 figures was going to start saying
| how its not a big deal. Yeah bro, Im not in SF Im in europe,
| a million would stop someone slaving until death to pay for a
| house for their children. The average salary here is like 25k
|
| For most people, yes even in 1st world countries, outside of
| FAANG its not about deciding whether or not one would have to
| continue wageslaving to mantain an SF lifestyle, property and
| trips to Cancun,
| poulsbohemian wrote:
| > The average salary here is like 25k
|
| It is in the U.S. too, we just struggle to acknowledge it
| because then we would also have to start asking hard
| questions about how Europeans have that average salary but
| also universal health care, public transportation, and a
| social safety net.
| lolinder wrote:
| Most of the world is not SF, and in most of the world
| $40k/year is life changing amounts of money. Your parent
| commenter replied with their own situation, but it's true in
| most of the US, too.
|
| In the US as a whole, 27% of the population already lives on
| less than $40k a year--they probably _wouldn 't_ stop working
| but they could! The _median_ income for a black person in the
| US is $48k /yr [0]. Where I live, $40k a year would be enough
| to take someone from median income to 80th percentile in a
| single event.
|
| If you don't think $40k/year is very much money, maybe take a
| pause to consider how lucky you are.
|
| [0] https://www.census.gov/content/dam/Census/library/publica
| tio...
| acchow wrote:
| The financial stability of a passive $40k means you don't
| need to worry about getting laid off. You can live a better
| life, follow your curiosity with low stress, and possibly
| discover a different thing you'd want to quit your job for.
| kubb wrote:
| It's a little known fact that IQ is positively correlated with
| income, but there's no correlation at all with net wealth. It is
| to be expected that there will be entire industries that spring
| up to extract some of that wealth from the less bright wealthy.
| The art market is one of such industries.
| yieldcrv wrote:
| Thanks for breaking it down like that
| snthd wrote:
| https://www.ft.com/content/3b1de7dc-368f-4864-bb73-cf4308a61...
|
| >A senior lawyer who works for a private bank in Zurich says
| that, although egregious, the situation was hardly novel: it is
| widespread practice in Switzerland that independent wealth
| managers are given full power of attorney by clients.
|
| >"We have clients where, basically, the authorised
| representatives, their financial advisers, do things like go
| and buy an expensive watch or whatever, and if we say, 'No,
| don't do that', we will hear something back asking us why on
| earth we are making a fuss . . . They say they have given these
| people these powers, and it's not up to us to decide what is
| reasonable or not."
| PaulHoule wrote:
| I always thought the 415 scams were aimed at rich people with
| poor judgement.
|
| I mean, who believes $10 million is going to fall out of the
| sky and hit them except _someone who has already been hit
| with $10 million falling from the sky_?
|
| Plus there is a limit for how much money you can scam out of
| a normal person.
| sumtechguy wrote:
| You can watch some of the scam baiter channels on YT. The
| scammers are not targeting the very rich (though they would
| not mind getting in on that). Usually they target retired
| people who have lost some of their faculties.
| steveBK123 wrote:
| Well put. If you've lived in NYC for any amount of time, you
| see both sides of this.
|
| 1) Disparate industries seemingly conspiring to extract every
| marginal dollar out of wealthy people (good for them). That is,
| there seems to be no amount of money you can have that isn't
| easily disposed of in NYC, leaving you wishing you had 10x
| more.
|
| 2) Wealthy people by inheritance who seem to be genuinely room
| temperature IQ out competing high income earners for the best
| apartments, with all cash offers
| sackfield wrote:
| Do you happen to know if those low intelligence wealthy
| people are slowly losing their wealth? Or is there a
| structure (like a trust) that administers this so they can't
| lose too much of it by their own action.
| Staple_Diet wrote:
| There's a common refrain that wealth disappears within 3
| generations.
| steveBK123 wrote:
| From my NYC observations, 3 generations seems like the
| best case.
| steveBK123 wrote:
| It definitely varies.
|
| In Brooklyn there are plenty of kids who inherited money
| and working jobs that do not match their
| wealth/housing/lifestyle. So they are spending down
| whatever wealth they inherited for sure.
|
| The typical picture I've seen is that the parents/trust buy
| them a condo all-cash, and then the underemployed then live
| a lifestyle that implies easily a $1M/year income except in
| a job that would imply a $0-$100k income. So unless they
| inherit like $25M+, they are spending it down quickly.
|
| I've also seen the early stages of this from the other end
| with my colleagues, where parents in NYC who come from more
| modest backgrounds, end up making FAANG level salaries but
| then having kids that want to get a philosophy degree and
| work at an NGO (while enjoying having a place in Manhattan
| to live and traveling internationally 3x/year).
|
| I guess theres a fine line between giving your kids space
| to grow & pushing too hard / trying to choose their path
| for them.. But being raised in comfort does seem to remove
| the striving mindset and understanding that this lifestyle
| doesn't come for free or from a fun job.
| throwaway7653 wrote:
| I've see much more limited versions of this. Living a
| $150k lifestyle on $65k income. Basically, blending in
| with the 20-something white collar scene. Then, they
| throw a wedding, and it removes all doubt :)
| mjburgess wrote:
| Could you provide some reference/evidence to this IQ/income
| correlation? In particular, I would expect no correlation above
| ~100 -- has this been controlled for?
| thfuran wrote:
| Why would you expect that?
| mjburgess wrote:
| That's what the wealth relationship shows. The only
| correlation is with the mental retardation range.
|
| Indeed, it seems very very likely that all correlations
| alleged of IQ, on independent performance measures, are
| just in this region (ie., that positive correlation above
| 100 comes merely from a trendline fit in the negatives).
| timmg wrote:
| > It is to be expected that there will be entire industries
| that spring up to extract some of that wealth from the less
| bright wealthy.
|
| I'm not sure it is as much "less bright" as maybe "more
| impulsive" or something like that. I think someone can be very
| smart and still want to "live for today".
| LastTrain wrote:
| What are some sources for that fact?
| kubb wrote:
| https://www.sciencedirect.com/science/article/abs/pii/S01602.
| ..
|
| https://www.sciencedirect.com/science/article/abs/pii/S01602.
| ..
| LastTrain wrote:
| Thanks. I guess the thing that sparked my curiosity /
| skepticism was that if there is a correlation between IQ
| and income, but none between IQ and wealth, it would seem
| to suggest there is also no correlation between income and
| wealth (or economic status, as these articles call it).
| I've only read the free snippets from the articles you
| posted, where this point isn't addressed directly but I
| have to assume they addressed it in some fashion in the
| full texts.
| kubb wrote:
| I'm guessing getting wealthy only through income is not
| very common. People get wealthy by inheriting or by
| holding assets, not by earning a salary.
| BlueTemplar wrote:
| That doesn't make sense. While IQ is mostly pseudoscience, I
| would still expect at least a small fraction of it to be
| inherited (along with money (not/) coming from (grand)parents'
| income in a smaller fraction of cases).
| yieldcrv wrote:
| prepandemic I used to run in those circles, Monaco, Switzerland
| OTC commodities dealers
|
| the people involved are total jokes
|
| they are extremely poor judges of character and endlessly shop
| deals around WhatsApp groups for dumb reasons
|
| people are praised for having been associated with something
| outside of the domain they are currently in, which is an obvious
| red herring and red flag, and then get scammed or have a bad deal
| where the other party cant deliver amicably, as there was nothing
| to suggest they would? I see the same in the US but it seems like
| a generational thing only boomers and mormons fall for. Elder
| abuse, pun intended for the latter
|
| but there are real "established" people in these European
| networks, sometimes, its just such a shitshow. because
| established means a dynasty of some sort, older than the US
| itself
|
| a lot of the participation is just pride and grasping for
| autonomy, like the first born son thrust into managing some
| feudal era family office has no clue what he's doing, and wants a
| good trade for once, but it was in some dilapidated mansion on
| the french riviera that now he needs to get out of before his
| family finds out, and France starts taxing Monaco citizens that
| hold property in France. and then the middle men are sourcing
| these dumb deals because they got screwed once and genuinely want
| to pay their old partners, at first, chasing gold and markups for
| the rest of their lives. its wild, I had to go back to tech these
| people are just dumb and the US markets are just so much more
| mature in comparison.
|
| but yes, you might meet the Saudi prince's Hand in Monaco and
| sell him a painting for $450m
|
| by far the most interesting part of this story is that Mr Bouvier
| purchased and took delivery of _some_ art pieces before reselling
| them, instead of just trying to dropship or connect people. way
| to go.
| iamacyborg wrote:
| There was a similar lawsuit in the early 00's (I think, it might
| have been the late 90's though) with Sotheby's caught ripping off
| clients in a similar way.
|
| My family lost a bunch of money on a Canova bust that's now at
| the Ashmolean in Oxford.
| vegetablepotpie wrote:
| Art done right is a tax dodge by the wealthy.
|
| Rich person buys a painting, by an artist, for $50 million and
| puts it in their collection.
|
| Another person buys another painting by the same artist for $75
| million.
|
| The rich person gets their painting reappraised by an art expert.
| It is now "estimated" to be worth $75 million.
|
| The rich person donates the work to a museum, a non-profit. The
| donation gives them a $75 million tax write off.
|
| The rich person just saved $25 million that would have otherwise
| been taxed.
| dabber wrote:
| > The rich person just saved $25 million that would have
| otherwise been taxed.
|
| In this example, wouldn't it have cost this person $50 million
| dollars though?
| itsoktocry wrote:
| People have this idea that there's something magical about
| "write-offs".
|
| In this case the rich person is spending $50 million dollars
| to save the tax on $75 million? Makes zero sense.
| rufus_foreman wrote:
| Cosmo Kramer: It's a write-off for them.
|
| Jerry: How is it a write-off?
|
| Cosmo Kramer: They just write it off.
|
| Jerry: Write it off what?
|
| Cosmo Kramer: Jerry, all these big companies, they write
| off everything.
|
| Jerry: You don't even know what a write-off is.
|
| Cosmo Kramer: Do you?
|
| Jerry: No, I don't.
|
| Cosmo Kramer: But they do. And they're the ones writing it
| off.
| itsoktocry wrote:
| > _The rich person donates the work to a museum, a non-profit.
| The donation gives them a $75 million tax write off. The rich
| person just saved $25 million that would have otherwise been
| taxed._
|
| So you're asserting that rich people and appraisers and
| insurance companies and museums are all conspiring to commit
| tax fraud?
| sparsely wrote:
| Conspiring is maybe strong, but it isn't in any of their
| interests to stop it happening.
| itsoktocry wrote:
| > _but it isn 't in any of their interests to stop it
| happening._
|
| It isn't in the insurance company's best interest to ensure
| they have an accurate assessment of the value of the item
| they're insuring?
|
| What is being described above is _fraud_.
| thfuran wrote:
| Tax fraud isn't really accurate either.
| Schiendelman wrote:
| Not conspiring. It's a natural outcome of the way this market
| works though.
| CPLX wrote:
| Michael: My father's no different from any other powerful
| man. Any man who's responsible for other people. Like a
| senator or president.
|
| Kay: You know how naive you sound? Senators and presidents
| don't have men killed.
|
| Michael: Oh. Who's being naive, Kay?
| alexey-salmin wrote:
| He burned $50 million to save taxes on $75 million?
| BasedInfra wrote:
| Exactly. Presuming a 50% tax (highest end worldwide) rate and
| a full write off they spent 50 mil to save 42.5 mil on taxes.
|
| Usually it'll be capital gains income where they would be
| writing off which is a much lower rate. Example 20% in which
| case they saved 15 mil in taxes for 50 mil investment.
|
| first 20% goes to gift aid in the UK so some countries you
| wouldnt even get full tax band.
|
| Now tax free storage of art usually in ports is interesting
| but not some 100% write off scheme.
| MrBuddyCasino wrote:
| Yeah this makes zero sense. Unless this is not about saving
| taxes, but money laundering.
| twic wrote:
| They spent 50 million in cash, received 42.5 in tax
| credits, and made a donation of 75 million. So
| effectively, they made a 75 million donation for 7.5
| million outlay. It's a very efficient way of making
| donations, but it doesn't make you better off in raw cash
| terms.
|
| But being rich is not about having cash, it's about using
| cash to achieve your ends. Giving 75 million is really
| buying 75 million worth of philanthropy - 75 million
| worth of social status, or invites to exclusive parties,
| or favours from patrons, or support for projects valuable
| to them. And they bought it for only 7.5 million!
| firtoz wrote:
| What'd be the alternative if you had not done the 50m ->
| 75m trick? Pay x$ more in taxes?
| BasedInfra wrote:
| The implication is that they do it purely for tax relief
| and not as an appreciating asset.
|
| If that was the case they would be losing millions each
| transaction.
| Mizza wrote:
| There are social benefits as well. Not only did you get to
| dodge some tax, you got to make a donation to a museum,
| they'll throw you a little party, you get to meet the mayor,
| etc etc
| CPLX wrote:
| You're close but that's not quite it.
|
| Here's a more realistic way it might work.
|
| Bob buys paintings A, B, C, and D as a lot for $10MM.
|
| "Things happen" in the art market and a few years later lo and
| behold "everyone" agrees those paintings are worth $200MM of
| course.
|
| Painting A (the most marginal of the four, of course) gets
| donated to museum X with a value of $50MM.
|
| Given standard tax rates on passive income Bob saves _at least_
| $10MM on his next tax bill and now has three completely free
| paintings thanks to your tax dollars.
| boringg wrote:
| This might be a better example. I also suspect the art world
| during the pandemic had crazy levels of inflation going on as
| crypto started looking for assets in the real world and
| needed to put that money somewhere as well as all other
| assets in the world going through very strange valuations.
| mhuffman wrote:
| >Bob buys paintings A, B, C, and D as a lot for $10MM.
|
| >later lo and behold "everyone" agrees those paintings are
| worth $200MM of course.
|
| Didn't Bob just get $190MM increase that is going to be
| capital gains?
| bane wrote:
| Capital gains is only realized (and thus taxable) at the
| time of sale.
| mhuffman wrote:
| So the idea is to buy the paintings, yadda yadda yadda,
| donate at a number that somehow exceeds your original
| price when taxes are accounted for and keep the other
| paintings forever?
| CPLX wrote:
| No you borrow against them at super low interest rates so
| you can have and spend the money anyways.
|
| Then at your death there's a thing called stepped up
| basis so your heirs inherit it at the market value not
| the original value.
|
| So your family net worth can go up by hundreds of
| millions without any of that being taxed at all.
|
| Yes it's really as fucked up as it sounds. The very rich
| simply don't pay taxes like you and me.
| bane wrote:
| There's a number of schemes to do this, art trading is
| just one vehicle to accomplish this but they all support
| the same basic two principles:
|
| 1 - get out of paying taxes by "showing a loss" somewhere
|
| 2 - don't ever lose money trying to get out paying taxes
|
| Show tax deferrable losses only when you make gains
| elsewhere sufficient to cover _at least_ the basis as
| well as the capital gains that you would have earned had
| you sold the item.
|
| It works best if you do this across completely unrelated
| asset classes: offset real estate taxes with collector
| cars, offset art sales taxes by taking a loss in some
| shell company. It takes a lot of money to get in this
| kind of scheme, because you have to vacuum up property
| that's likely to grow in value. For example, don't buy
| cars (which depreciate), buy one of kind sports cars for
| which there's a collectors market. It also takes a lot of
| time to tap into various collector markets and find ones
| that are likely to yield or will soon yield growth for
| your asset classes. Not all collector markets go up
| forever, they're as fad driven as anything, but some
| markets have reliably shown growth -- like fine art.
|
| My favorite scheme is one you see on the "Real
| Housewives" show. Start a nonprofit charity, get all your
| friends to donate to it (they're all trying to skip out
| on taxes also), pay yourself an exorbitant salary out of
| this "charity" and hold elaborate fundraisers that are
| essentially parties as the operating costs for the
| charity. Give the remainder to another charity
| downstream. Attend your friend's charity
| fundraisers/parties, donate to them in turn.
|
| Looking at the circle of "philanthropists" they get to
| attend socialite functions, party, get paid, and do it
| all by helping each other offset taxes on gains they're
| making in other investments within their own households.
| They also get to inexpertly run "charities" where the
| hotel ballroom they rent for the function costs more than
| the remainder of the donated money they actually send to
| their claimed cause -- but also if the tax man comes they
| can just say they had no idea what they were doing.
|
| Tie it to some personal event (e.g. "my second cousin
| fell from a bike and broke her wrist and now I'm running
| a charity for bone density research") and people outside
| the main circle might get sucked in and also augment the
| entire thing with additional heartfelt donations, which
| only increases the size of the parties and the salaries.
| Advertise you "raised $x" at an event, but don't mention
| how much went to actually supporting the cause.
|
| It works because:
|
| - it both obfuscates and mixes up everybody's money to
| the extent that it becomes very hard to pull apart
|
| - the individual charities don't become large enough for
| the IRS to spend time on if you file all the appropriate
| paperwork
|
| - it's not really an asset class in the same way
| investments are, so it's nearly impossible to show tax
| avoidance by simple substitution
|
| - the government wants to encourage charity
|
| You have to get really large and egregious before anybody
| in the IRS cares. Like NRA large.
| rufus_foreman wrote:
| First of all, as others have pointed out, the math here doesn't
| check out. The rich person is now less rich.
|
| Second, the IRS is hip to this. They require a qualified
| appraisal, they have rules about who the appraiser can be and
| what information is required. Then, they have a network of
| experts who would do their own research on an art deduction of
| this size and give their own estimate of value (without knowing
| how much the taxpayer was claiming it was worth). And finally,
| if the charity that received the artwork sells the artwork for
| less than $75 million before the IRS does its research, they're
| going can use that information to determine the real value.
|
| -- https://www.reuters.com/legal/legalindustry/unlocking-
| myster...
|
| In short, for people planning on avoiding taxes, please consult
| a licensed tax avoidance specialist for advice in addition to
| doing research on internet chat boards.
| boringg wrote:
| So if I understand your example. I buy a $50M asset on the
| supposed hope that it goes up in value at which point I then
| donate it to the museum at an inflated value. 50% gain seems
| like a fair bit in a short period but I'll use it for your
| sake. So 75M$ tax write off. Now assuming that I am in an
| expensive tax jurisdiction and I can write this against short
| term cap gains - 40% - thats $30M in a tax benefit.
|
| TL;DR. Put $50M capital to work to get a $30M tax write off in
| the future ASSUMING significant gains. During that time you get
| to own an expensive piece of art. So you get the artwork for a
| net COST of $20M ($50M purchase - $30M tax benefit).
|
| It doesnt make sense purely on economics of the example -
| unless significantly more capital appreciation in the asset,
| other reasoning for pursuing it or other tax benefits in the
| country.
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