Saturday, August 29, 2009
"All we really have is our word"
New Mexico's KRQE reports that "a woman who sold two paintings to an Albuquerque art dealer-appraiser for $4,500 later auctioned for $661,000 won a cash settlement in court this week after alleging she had been defrauded." That's a slightly misleading way of putting it: it makes it sound as if the dealer-appraiser bought them at $4,500 and turned around and re-sold them for the $661,000, when, in fact, according to the story, he sold them for $35,000, and they then "passed hands two more times" and eventually sold at auction for the larger figure. The seller sued for fraud and negligence, and the jury "returned a split verdict .... [The dealer-appraiser] was cleared of fraud but found to be negligent and ordered to pay [the seller] nearly $15,000."
Friday, August 28, 2009
"The question is simply why there’s such anger"
An "honest question" from the Art Market Monitor for "the vocal opponents of deaccessioning." (The subject this time is Robin Pogrebin's recent NYT piece on "turnkey" museum exhibitions organized by corporations. Judith Dobrzynski, Ed Winkleman, and Derek Fincham all commented on the story earlier in the week.)
Thursday, August 27, 2009
More on the Peters Gallery Lawsuit
Josh Baer gets a statement from the Gerald Peters Gallery on the lawsuit mentioned here: "This lawsuit appears to be grounded in nothing more than buyers remorse, likely brought about by the economic downturn. Neither the facts nor the law support the claims made. The facts will demonstrate the gallery acted properly." Josh says "this seems like an easy case - either there is a record of an agreement allowing Waitt to rescind/take on approval works or not" (this overlooks the possibility, I think, of a contract having been formed through a course of dealing between the parties), but thinks what's really needed is "a strong arbitration process run by the Art Dealers Association that collectors (or dealers) could take complaints to."
Found (but maybe never lost)
Yesterday, Derek Fincham flagged a story that a Picasso painting "which was looted by an Iraqi soldier during the 1990 invasion of Kuwait has been recovered by Iraqi security forces." Today comes news that maybe it's not a Picasso after all: "The painting has a tag on the back with several misspellings that says it was sold by 'the louvre' to 'the museum of kuwait,' with the words Louvre and Kuwait in lower case. There are also several stamps bearing the name of the Louvre Museum in Paris. But an official with the Louvre Museum said it has never had a Picasso in its collection and does not sell its works because they are government property. ... The London-based Art Loss Registry said it has no record of any paintings missing from the Kuwait National Museum, and no record of this particular painting as missing at all."
No Nudes at the Met
A 26-year-old model was arrested yesterday after posing naked for a photo shoot in the arms and armor room of the Met. She was charged with two crimes: endangering the welfare of a minor and public lewdness. The photographer, Zach Hyman, has not been charged. Full story in the LA Times. The NY Post's coverage, with photos and video, is here.
Wednesday, August 26, 2009
Let the Wild Rumpus Begin!
The Iowa City Press-Citizen reports that "the University of Iowa has established an envisioning committee to consider options for the future of the UI Museum of Art, the university announced Tuesday."
Derek Fincham sums up the state of play: "So, we have a situation where it is not possible to return the works to the original, flood-prone museum; and paying for a new museum will be difficult."
And he has a thought: "One thing I think the committee should consider is selling a few of the works to another public institution, and using the funds raised to keep much of the art at UI."
How dare he! Perish the thought! Philistine! Repulsive! Stalinesque!
I have a headache already.
Derek Fincham sums up the state of play: "So, we have a situation where it is not possible to return the works to the original, flood-prone museum; and paying for a new museum will be difficult."
And he has a thought: "One thing I think the committee should consider is selling a few of the works to another public institution, and using the funds raised to keep much of the art at UI."
How dare he! Perish the thought! Philistine! Repulsive! Stalinesque!
I have a headache already.
"Ruling is a setback for sports artist"
The Tuscaloosa News has the latest in Daniel Moore's lawsuit with the University of Alabama, now in its fifth year and on its fifth judge.
"I won’t let anyone treat me like this" (UPDATED)
Bloomberg has more on the lawsuit by Moscow dealer Gary Tatintsian against Luhring Augustine Gallery, mentioned last week here.
UPDATE: Some thoughts on the story from the Art Market Monitor: "Nobody likes to be treated like they’re second in line."
UPDATE: Some thoughts on the story from the Art Market Monitor: "Nobody likes to be treated like they’re second in line."
"Ye gods, man, you're accused of what, making a million and a half bucks by ripping off who, a bunch of nuns?"
In the Maine Antique Digest, David Hewett has the latest twist in the story of the nuns and their $2 million Bouguereau, mentioned earlier here and here.
Tuesday, August 25, 2009
Wildenstein Dismissal Affirmed
Back in Sept. 2007, I mentioned the dismissal of a state court lawsuit against Guy Wildenstein. The Appellate Division has now affirmed, but, interestingly, two judges wrote separate dissents.
The case concerns an appraisal Wildenstein wrote and which the plaintiff claims overstated the value of the work. The majority affirmed the dismissal because there was no "basis for connecting [the plaintiff] to Wildenstein": "There is no allegation or evidence that Wildenstein even knew of [plaintiff's] existence (by name or anonymously) or that [plaintiff] or any other person would rely upon his opinion to buy the painting."
One dissenter agreed that the claims at law (fraud, fraudulent misrepresentation, negligent misrepresentation, etc.) failed, but thought the equitable claim for unjust enrichment should survive: "There is no requirement that the aggrieved party be in privity with the party enriched at his or her expense."
The other dissenter thought the whole complaint should be reinstated: "Since the record does not establish what the relationships of any of the parties were, or what was known or unknown by any of them, the need for discovery is evident, and the motion to dismiss should be denied."
You can read the opinions here.
The case concerns an appraisal Wildenstein wrote and which the plaintiff claims overstated the value of the work. The majority affirmed the dismissal because there was no "basis for connecting [the plaintiff] to Wildenstein": "There is no allegation or evidence that Wildenstein even knew of [plaintiff's] existence (by name or anonymously) or that [plaintiff] or any other person would rely upon his opinion to buy the painting."
One dissenter agreed that the claims at law (fraud, fraudulent misrepresentation, negligent misrepresentation, etc.) failed, but thought the equitable claim for unjust enrichment should survive: "There is no requirement that the aggrieved party be in privity with the party enriched at his or her expense."
The other dissenter thought the whole complaint should be reinstated: "Since the record does not establish what the relationships of any of the parties were, or what was known or unknown by any of them, the need for discovery is evident, and the motion to dismiss should be denied."
You can read the opinions here.
"Bartering may be the answer to bail us out of our current crisis" (UPDATED)
Lindsay Pollock points to a "no money art show" this weekend in Chelsea -- Art4Barter. The press release explains: "No works shall be sold for money but rather for services and goods. The exact service or good that the artist requires will be on the label next to their art. For example, if an artist were to ask for dental work or other medical procedures in exchange for their art, or for a studio to work in, etc., it will give the community an opportunity to barter for those items that are missing from the artists' lives."
I would add just a word of warning.
UPDATE: Economist Michael Rushton points out that there was a similar exhibition in Philadelphia in March. A Philadelphia Inquirer story at the time quoted him as follows:
"I see it as not an awfully important thing. The barter in modern times is a bit of a gimmick, really. It's a fairly ineffective way to go about your business. The electrician always had the option of going to an art fair and a gallery and looking for things. . . . All you've done is made things more difficult for obtaining the services."
I would add just a word of warning.
UPDATE: Economist Michael Rushton points out that there was a similar exhibition in Philadelphia in March. A Philadelphia Inquirer story at the time quoted him as follows:
"I see it as not an awfully important thing. The barter in modern times is a bit of a gimmick, really. It's a fairly ineffective way to go about your business. The electrician always had the option of going to an art fair and a gallery and looking for things. . . . All you've done is made things more difficult for obtaining the services."
Rose Update
Brandeis student newspaper The Justice has more on the transfer earlier this month of the Rose lawsuit from the Massachusetts Supreme Court to the (less supreme) probate court.
The University's lawyer, former Massachusetts AG Thomas Reilly, is quoted as saying:
"The Rose Art Museum is open. The plaintiffs were claiming that it's closed; that's simply not true. They were claiming that [there] was a sale of paintings that was imminent; that's simply not true. So there are serious misrepresentations in the complaint, but the bottom line is the Court wouldn't take their case and didn't take their case."
One of the plaintiffs, Jonathan Lee, chairman of the Rose Board of Overseers, "said in an interview that he was not displeased with the court's decision to transfer the case" (one wonders why he bothered filing the suit in the Supreme Court then in the first place).
A case management conference is scheduled for Sept. 1.
The University's lawyer, former Massachusetts AG Thomas Reilly, is quoted as saying:
"The Rose Art Museum is open. The plaintiffs were claiming that it's closed; that's simply not true. They were claiming that [there] was a sale of paintings that was imminent; that's simply not true. So there are serious misrepresentations in the complaint, but the bottom line is the Court wouldn't take their case and didn't take their case."
One of the plaintiffs, Jonathan Lee, chairman of the Rose Board of Overseers, "said in an interview that he was not displeased with the court's decision to transfer the case" (one wonders why he bothered filing the suit in the Supreme Court then in the first place).
A case management conference is scheduled for Sept. 1.
Monday, August 24, 2009
Barnes Doc
This year's New York Film Festival lineup includes The Art of the Steal: "Bound to be controversial, this thought-provoking documentary explores the travails of the legendary Barnes collection of art masterworks and the foundation set up to protect it [and] raises vital questions about public vs. private 'ownership' of art." Sept. 29, 9:15 pm.
Friday, August 21, 2009
As old as the Eden tree
Lots of stories about fakes in the news lately.
Derek Fincham points to a story in ARTnews "on the slew of Russian avant-garde paintings which were alleged to be fake." One expert is quoted as saying: "There are more fakes than genuine pictures."
Fom the AP: "German police have confiscated hundreds of bronze and plaster statues alleged to be the works of Alberto Giacometti and arrested an art dealer and two others on suspicion of selling the fakes across the globe."
An art dealer in San Francisco has been indicted by a federal grand jury on fraud charges "for allegedly selling fake Joan Miro prints."
The New Mexico state attorney general’s office "entered into a consent decree with Golden Bear Trading Inc. of Santa Fe over selling fake Indian art work."
The Art Newspaper's Jason Edward Kaufman reports that "a collection of Frida Kahlo oil paintings, diaries and archival material that is the subject of a book to be published by Princeton Architectural Press on November 1 has been denounced by scholars as a cache of fakes."
The Guardian's Jonathan Jones says "the fear of fakes does far more harm than forgery itself. This terror that comes with the pride of thinking you know something about art corrodes pleasure, cripples the imagination, blinds you to what might be beautiful. Art is riddled with forgeries, misattributions and dodgy restorations. ... The kind of scholarship that does not add to the excitement of art, but instead makes people terrified that what they are seeing might be inauthentic, is arrogant and destructive."
ARTINFO's Yael Friedman asks: "Why are individuals of means, often extraordinarily savvy in their other financial dealings, so vulnerable when it comes to the acquisition of art? What is it about art that causes buyers to take such leaps of faith, often only to discover that simple research could have easily uncovered any snags or malfeasance?"
Derek Fincham points to a story in ARTnews "on the slew of Russian avant-garde paintings which were alleged to be fake." One expert is quoted as saying: "There are more fakes than genuine pictures."
Fom the AP: "German police have confiscated hundreds of bronze and plaster statues alleged to be the works of Alberto Giacometti and arrested an art dealer and two others on suspicion of selling the fakes across the globe."
An art dealer in San Francisco has been indicted by a federal grand jury on fraud charges "for allegedly selling fake Joan Miro prints."
The New Mexico state attorney general’s office "entered into a consent decree with Golden Bear Trading Inc. of Santa Fe over selling fake Indian art work."
The Art Newspaper's Jason Edward Kaufman reports that "a collection of Frida Kahlo oil paintings, diaries and archival material that is the subject of a book to be published by Princeton Architectural Press on November 1 has been denounced by scholars as a cache of fakes."
The Guardian's Jonathan Jones says "the fear of fakes does far more harm than forgery itself. This terror that comes with the pride of thinking you know something about art corrodes pleasure, cripples the imagination, blinds you to what might be beautiful. Art is riddled with forgeries, misattributions and dodgy restorations. ... The kind of scholarship that does not add to the excitement of art, but instead makes people terrified that what they are seeing might be inauthentic, is arrogant and destructive."
ARTINFO's Yael Friedman asks: "Why are individuals of means, often extraordinarily savvy in their other financial dealings, so vulnerable when it comes to the acquisition of art? What is it about art that causes buyers to take such leaps of faith, often only to discover that simple research could have easily uncovered any snags or malfeasance?"
"A large number of art attackers appear to be several sandwiches short of the full picnic"
Inspired by "the recent assault on the Mona Lisa with the unlikely weapon of a teacup," Bloomberg's Martin Gayford asks: "Why do people attack art?"
On some legal issues surrounding art vandalism, see here.
On some legal issues surrounding art vandalism, see here.
"The case is still something of a mystery"
Soon-to-be movie-star Richard Lacayo on the 98th anniversary of The Great Mona Lisa Heist.
The Stealth Brodsky Bill
Lee Rosenbaum reports that the NY State Board of Regents has released its Proposed Permanent Amendment to its deaccessioning rules. Lee summarizes:
"This amendment ... would prohibit use of deaccession proceeds for operating expenses, payment of outstanding debt, or capital expenses (other than those for historic buildings designated as part of an institution's collection). Proceeds cannot be used as loan collateral, and 'collections shall not be capitalized' (i.e., listed as assets on an institution's balance sheet). They can be used only for the acquisition, preservaton, protection or care of collections."
Lee thinks these rules are even "more stringent than the deaccession guidelines of the [AAMD]," but I'm not so sure about that. It seems to me that the exception for "refinement of collections" puts us exactly where the AAMD rules are: sales to buy more art are fine; sales for any other purpose you can think of are not.
Lee is of course thrilled: "I believe that government oversight ... is needed now more than ever, as the temptation to monetize collections for a quick fix becomes increasingly hard to resist. I've lost confidence in the ability of the field to regulate itself. It's time to call in the reinforcements." Cornell's Peter Hirtle offers some thoughts here. My own views on this issue should be pretty clear by now.
Public comments on the proposal are due Sept. 25. The Regents will vote on it at their meeting on Oct. 19-20. If they are adopted, the effective date of the new rules will be Nov. 12.
One interesting feature of this whole debate is that, while it's the Brodsky Bill that gets all the attention, with the exception of the few institutions not chartered by the Board of Regents, these regulations achieve the same effect, but in a much quieter way.
You can read the proposed amendment here. The full text of the current version of the regulations (see §3.27) is here.
"This amendment ... would prohibit use of deaccession proceeds for operating expenses, payment of outstanding debt, or capital expenses (other than those for historic buildings designated as part of an institution's collection). Proceeds cannot be used as loan collateral, and 'collections shall not be capitalized' (i.e., listed as assets on an institution's balance sheet). They can be used only for the acquisition, preservaton, protection or care of collections."
Lee thinks these rules are even "more stringent than the deaccession guidelines of the [AAMD]," but I'm not so sure about that. It seems to me that the exception for "refinement of collections" puts us exactly where the AAMD rules are: sales to buy more art are fine; sales for any other purpose you can think of are not.
Lee is of course thrilled: "I believe that government oversight ... is needed now more than ever, as the temptation to monetize collections for a quick fix becomes increasingly hard to resist. I've lost confidence in the ability of the field to regulate itself. It's time to call in the reinforcements." Cornell's Peter Hirtle offers some thoughts here. My own views on this issue should be pretty clear by now.
Public comments on the proposal are due Sept. 25. The Regents will vote on it at their meeting on Oct. 19-20. If they are adopted, the effective date of the new rules will be Nov. 12.
One interesting feature of this whole debate is that, while it's the Brodsky Bill that gets all the attention, with the exception of the few institutions not chartered by the Board of Regents, these regulations achieve the same effect, but in a much quieter way.
You can read the proposed amendment here. The full text of the current version of the regulations (see §3.27) is here.
Dealer Defamation Suit
Private dealer Paul Rusconi is suing actress Claire Forlani for defamation: "On July 27 of this year, Forlani allegedly ... sent out a mass email claiming Rusconi was selling art work that he knew had been forged 'and that he routinely defrauded his clients by vastly overcharging for the works he sold to them.'"
Rusconi is represented by Kaye Scholer, and seeks "at leat $25 million" in damages.
Rusconi is represented by Kaye Scholer, and seeks "at leat $25 million" in damages.
Thursday, August 20, 2009
No Less Than Three
Artnet News notes that Josh Baer might have to start a new newsletter devoted just to legal news:
"His Aug. 18 issue, for instance, featured items on no less than three legal actions: a dispute involving Gateway Computer founder Norman Waitt over some paintings he acquired from Gerald Peters Gallery; a lawsuit by Moscow dealer Gary Tatintsian against Luhring Augustine Gallery over the sale of a dozen George Condo paintings for $4.5 million; and a $5-million suit filed against Christie’s by Georges Marciano and Beverly Hills Antiques accusing the auction house of negligence in the transport of a collection of 400 artworks."
"His Aug. 18 issue, for instance, featured items on no less than three legal actions: a dispute involving Gateway Computer founder Norman Waitt over some paintings he acquired from Gerald Peters Gallery; a lawsuit by Moscow dealer Gary Tatintsian against Luhring Augustine Gallery over the sale of a dozen George Condo paintings for $4.5 million; and a $5-million suit filed against Christie’s by Georges Marciano and Beverly Hills Antiques accusing the auction house of negligence in the transport of a collection of 400 artworks."
Wednesday, August 19, 2009
"How could this happen to Annie Leibovitz?"
The Atlantic Wire has a roundup of commentary on the Annie Leibovitz mess.
Live With It
"An art collector claims that in the course of spending $10 million with the Gerald Peters Gallery, they developed a deal in which he could 'live with' art for a while to decide if he wanted to keep it, and if not, he could return it for a refund or 'art of equivalent value.'"
Norman Waitt v. the Gerald Peters Gallery.
Norman Waitt v. the Gerald Peters Gallery.
Tuesday, August 18, 2009
Leibovitz Update
This week's New York magazine has a lengthy story on Annie Leibovitz's legal troubles. Felix Salmon says "Art Capital did not ... simply have $24 million lying around when it extended the loan to Leibovitz. As a result, it sold part of the loan to other investors, including Goldman Sachs. And Goldman Sachs, while it’s happy to make lots of money, does not want to be painted as a predatory lender. So Goldman is now Leibovitz’s best hope: if Goldman can buy out Art Capital, it might be able to come to a more Annie-friendly agreement." And the Art Market Monitor adds some thoughts: Art Capital Group Negotiates with Goldman Sachs Through Bloomberg.
Stolen Art Database
Derek Fincham notes that INTERPOL is putting its stolen art database online. Says Derek: "This is a remarkable development in a number of ways, and makes it possible for anyone to search. This means it will be far more difficult for a buyer to claim he or she did not have the resources to check into a work's history."
Sunday, August 16, 2009
"Where do you draw the line between critique or parody and outright exploitation?"
In the NYT Week in Review section today, Charles McGrath discusses the legal issues surrounding literary prequels and sequels, including the Salinger case currently on appeal to the Second Circuit:
"Mr. Salinger, who is 90 and went all the way to the United States Supreme Court in the late 1980s to stop the biographer Ian Hamilton from quoting from his work, has just won another legal battle, halting the publication of '60 Years Later: Coming Through the Rye,' a sequel to 'The Catcher in the Rye,' by Fredrik Colting, a Swede who for some reason writes under the name J. D. California. Most accounts of Mr. Colting’s book make it sound pretty awful: Holden Caulfield, now in his 70s and stricken with urological problems, escapes from a nursing home and reunites with his sister Phoebe, who is apparently suffering from dementia. ... But Mr. Colting’s book has nevertheless become a literary cause célèbre, with a number of legal experts ... seeking to overturn the judge’s decision. The argument is that the Colting text is 'transformative': that instead of being a mere rip-off, it adds something original and substantive to Mr. Salinger’s version."
"Mr. Salinger, who is 90 and went all the way to the United States Supreme Court in the late 1980s to stop the biographer Ian Hamilton from quoting from his work, has just won another legal battle, halting the publication of '60 Years Later: Coming Through the Rye,' a sequel to 'The Catcher in the Rye,' by Fredrik Colting, a Swede who for some reason writes under the name J. D. California. Most accounts of Mr. Colting’s book make it sound pretty awful: Holden Caulfield, now in his 70s and stricken with urological problems, escapes from a nursing home and reunites with his sister Phoebe, who is apparently suffering from dementia. ... But Mr. Colting’s book has nevertheless become a literary cause célèbre, with a number of legal experts ... seeking to overturn the judge’s decision. The argument is that the Colting text is 'transformative': that instead of being a mere rip-off, it adds something original and substantive to Mr. Salinger’s version."
"The dispute raises questions about the obligation of a state government with finite resources to uphold the artistic vision of a public memorial"
Sergio Muñoz Sarmiento spots a threatened VARA suit in Washington State involving a World War II memorial sculpture. According to a local news report, artist Simon Kogan "says that overaggressive cleaning in May 2007 damaged the memorial .... He has demanded that the state agency fix the damage or he will sue."
On that way of framing the issue, one problem Kogan faces under VARA is section 106A(c)(2): "The modification of a work of visual art which is the result of conservation ... is not a destruction, distortion, mutilation, or other modification described in subsection (a)(3) unless the modification is caused by gross negligence."
On that way of framing the issue, one problem Kogan faces under VARA is section 106A(c)(2): "The modification of a work of visual art which is the result of conservation ... is not a destruction, distortion, mutilation, or other modification described in subsection (a)(3) unless the modification is caused by gross negligence."
Saturday, August 15, 2009
Roerich Return (UPDATED)
Art Theft Central's Mark Durney breaks the news that one of the two works recently stolen from the Nicholas Roerich Museum was returned, in an "ordinary yellow, padded envelope, with a Brooklyn return address."
UPDATE: More from Durney: "From my exchanges with a museum representative, I would describe them as cautiously optimistic for the return of the [second work]."
UPDATE: More from Durney: "From my exchanges with a museum representative, I would describe them as cautiously optimistic for the return of the [second work]."
Friday, August 14, 2009
Lloyd Webber Dismissal Affirmed
The Appellate Division has affirmed the dismissal, on standing grounds, of a lawsuit against the Andrew Lloyd Webber Art Foundation by a man who claimed his great-uncle was forced by the Nazis to sell a Picasso painting now owned by the foundation. I discussed the lower court decision here. Am Law Litigation Daily's Alison Frankel has a good summary:
"Under New York law, the appellate division opinion says, Schoeps would have had to show that he had been appointed the personal representative of his great-uncle's estate. Instead, the record showed only that he was one of several heirs .... That's quite a different result than what Schoeps ... achieved in similar litigation [before Manhattan federal district court judge Jed Rakoff] with the Museum of Modern Art and the Guggenheim Museum. The state appellate court expressly rejected Rakoff's reasoning on Schoeps's standing."
"Under New York law, the appellate division opinion says, Schoeps would have had to show that he had been appointed the personal representative of his great-uncle's estate. Instead, the record showed only that he was one of several heirs .... That's quite a different result than what Schoeps ... achieved in similar litigation [before Manhattan federal district court judge Jed Rakoff] with the Museum of Modern Art and the Guggenheim Museum. The state appellate court expressly rejected Rakoff's reasoning on Schoeps's standing."
Thursday, August 13, 2009
Tuesday, August 11, 2009
Fractional Gift News
The Wall Street Journal reports that "reacting to museums' complaints of sharp declines in art donations, a bill announced Friday by Sen. Charles Schumer ... could revive the practice of so-called fractional gifts."
Some brief background is probably in order. The Pension Protection Act of 2006 drastically changed the rules applicable to fractional gifts -- essentially bringing about an end to fractional giving. The most serious problem was what I referred to as the "mismatch problem": if the work appreciated in value between the time of the initial gift and a subsequent gift, the excess value of the subsequent gift would have been subject to gift or estate tax. In early 2008 technical corrections were enacted fixing the mismatch problem, but, as I noted at the time:
"[The technical corrections] do not, however, change the requirements that (1) the gift be completed within 10 years (or, if sooner, the collector's death) or (2) the value of any additional contributions be determined using the lesser of the value of the work at the time of the initial contribution or the time of the additional contribution (thus depriving donors of the benefit of any increase in the value of the work over time). So, while the corrections do bring fractional gifts back from the dead (as evidenced by the recent major gift to LACMA), there still remain some disincentives to fractional giving."
The new bill focuses on these two issues, and basically tracks the "agreement in principle" among members of the Senate Finance Committee that was described in a New York Times article in July of last year:
First, it was reported that "amendments hammered out by aides to Mr. Schumer and Mr. Grassley would lengthen [the 10-year donation period] to 20 years" -- and that's exactly what the new bill provides.
And second, it was said that Grassley appeared "willing to allow donors to claim deductions for subsequent donations that reflect increases in the value of the portion of the artwork they still own." That is also now reflected in the bill.
There's one other important change to note. Back in 2006, when this problem first surfaced, I mentioned a New York Times article which said that proponents of the change were concerned about "abuse" by collectors who "received upfront tax deductions for works that will not appear in museum collections for decades, if ever." Senator Grassely was quoted as saying: "It isn’t right for a donor to get a big tax break for supposedly donating a painting that hangs in his living room, not the museum, all year. A painting in a private living room doesn’t benefit the public." As I said then:
"Those problems, to the extent they are problems, could have been solved with the following two changes:
"1. By overruling the Winokur rule that the museum’s legal entitlement to possession for a portion of the year was sufficient to secure the deduction, even if it never took actual possession. This would eliminate Senator Grassley's concerns about a painting hanging in the collector's living room all year.
"2. By requiring that the collector transfer her remaining interest to the museum by some outside date .... This would deal with the concerns ... about works not appearing in the museum's collection 'for decades, if ever' (though the first change, overruling Winokur, would ensure that, from the beginning, the works would appear in the museum's collection for at least part of each year)."
As we've seen, the new bill does the second thing: it sets an outside date of 20 years for completion of the gift. But it also does the first: it overrules Winokur by providing that, for every five-year period, the work must be "in the physical possession" of the museum (and "used in a use which is related to a purpose or function constituting the basis for the donee organization's [tax] exemption") for a portion of the time "substantially" equivalent to its fractional interst (so, for example, a museum with a 20% interest in a painting must take physical possession of the painting for roughly one year out of the five). The WSJ story interprets this provision as requiring that the museum "exhibit the artwork in proportion to its ownership interest over every five-year period" (my emphasis), but it's not clear to me whether keeping a work in storage, or perhaps making it accessible to scholars, would satisfy that requirement. If not, then the donor may have to extract a promise from the museum, as a condition of the gift, to exhibit the work in compliance with this provision.
Very briefly, a few other points about the bill. First, like the Pension Protection Act, it provides that no deduction will be allowed unless all interests in the work were owned by the donor and the donee immediately before the contribution (although it contemplates the issuance of regulations covering "cases where all persons who hold an interest in the property make proportional contributions" of their interests).
Second, the initial fractional contribution must be at least 10%, and it must be pursuant to a "written binding contract" which requires (a) that a total of at least 20% be contributed within 11 years and (b) the rest be contributed within 20 years.
Finally, for works (as distinct from interests) worth more than $1 million, the donor has to attach to her tax return "a statement of value obtained from the Internal Revenue Service." There are also additional reporting requirements for museums.
You can read the bill, S. 1605, here.
Some brief background is probably in order. The Pension Protection Act of 2006 drastically changed the rules applicable to fractional gifts -- essentially bringing about an end to fractional giving. The most serious problem was what I referred to as the "mismatch problem": if the work appreciated in value between the time of the initial gift and a subsequent gift, the excess value of the subsequent gift would have been subject to gift or estate tax. In early 2008 technical corrections were enacted fixing the mismatch problem, but, as I noted at the time:
"[The technical corrections] do not, however, change the requirements that (1) the gift be completed within 10 years (or, if sooner, the collector's death) or (2) the value of any additional contributions be determined using the lesser of the value of the work at the time of the initial contribution or the time of the additional contribution (thus depriving donors of the benefit of any increase in the value of the work over time). So, while the corrections do bring fractional gifts back from the dead (as evidenced by the recent major gift to LACMA), there still remain some disincentives to fractional giving."
The new bill focuses on these two issues, and basically tracks the "agreement in principle" among members of the Senate Finance Committee that was described in a New York Times article in July of last year:
First, it was reported that "amendments hammered out by aides to Mr. Schumer and Mr. Grassley would lengthen [the 10-year donation period] to 20 years" -- and that's exactly what the new bill provides.
And second, it was said that Grassley appeared "willing to allow donors to claim deductions for subsequent donations that reflect increases in the value of the portion of the artwork they still own." That is also now reflected in the bill.
There's one other important change to note. Back in 2006, when this problem first surfaced, I mentioned a New York Times article which said that proponents of the change were concerned about "abuse" by collectors who "received upfront tax deductions for works that will not appear in museum collections for decades, if ever." Senator Grassely was quoted as saying: "It isn’t right for a donor to get a big tax break for supposedly donating a painting that hangs in his living room, not the museum, all year. A painting in a private living room doesn’t benefit the public." As I said then:
"Those problems, to the extent they are problems, could have been solved with the following two changes:
"1. By overruling the Winokur rule that the museum’s legal entitlement to possession for a portion of the year was sufficient to secure the deduction, even if it never took actual possession. This would eliminate Senator Grassley's concerns about a painting hanging in the collector's living room all year.
"2. By requiring that the collector transfer her remaining interest to the museum by some outside date .... This would deal with the concerns ... about works not appearing in the museum's collection 'for decades, if ever' (though the first change, overruling Winokur, would ensure that, from the beginning, the works would appear in the museum's collection for at least part of each year)."
As we've seen, the new bill does the second thing: it sets an outside date of 20 years for completion of the gift. But it also does the first: it overrules Winokur by providing that, for every five-year period, the work must be "in the physical possession" of the museum (and "used in a use which is related to a purpose or function constituting the basis for the donee organization's [tax] exemption") for a portion of the time "substantially" equivalent to its fractional interst (so, for example, a museum with a 20% interest in a painting must take physical possession of the painting for roughly one year out of the five). The WSJ story interprets this provision as requiring that the museum "exhibit the artwork in proportion to its ownership interest over every five-year period" (my emphasis), but it's not clear to me whether keeping a work in storage, or perhaps making it accessible to scholars, would satisfy that requirement. If not, then the donor may have to extract a promise from the museum, as a condition of the gift, to exhibit the work in compliance with this provision.
Very briefly, a few other points about the bill. First, like the Pension Protection Act, it provides that no deduction will be allowed unless all interests in the work were owned by the donor and the donee immediately before the contribution (although it contemplates the issuance of regulations covering "cases where all persons who hold an interest in the property make proportional contributions" of their interests).
Second, the initial fractional contribution must be at least 10%, and it must be pursuant to a "written binding contract" which requires (a) that a total of at least 20% be contributed within 11 years and (b) the rest be contributed within 20 years.
Finally, for works (as distinct from interests) worth more than $1 million, the donor has to attach to her tax return "a statement of value obtained from the Internal Revenue Service." There are also additional reporting requirements for museums.
You can read the bill, S. 1605, here.
Monday, August 10, 2009
Still More on the Roerich Thefts
From Art Theft Central's Mark Durney here and here: "Why are the police only publicizing the thefts now? Also, if the museum receives only approximately 35 visitors a day, then have investigators attempted to track who visited on Wednesday, June 24 and Sunday, June 28?"
Background here.
Background here.
Arts Programming Cuts
The top story in the NYT Arts section today tells how "tens of thousands of students at public and private colleges and universities around the country will find arts programs, courses and teachers missing — victims of piercing budget cuts — when they descend on campuses this month and next." You can read the gory details here.
Derek Fincham thinks it perhaps "indicates ... a potential tide of deaccessions across the country":
"Given this, I think we need to seriously ask whether the current set of rules for deaccessioning works of art are really ensuring the continued viability of the arts. Why can't a University decide to sell all or part of its art collection? So long as it remains on display or available to researchers in the public trust, who is harmed?"
Derek Fincham thinks it perhaps "indicates ... a potential tide of deaccessions across the country":
"Given this, I think we need to seriously ask whether the current set of rules for deaccessioning works of art are really ensuring the continued viability of the arts. Why can't a University decide to sell all or part of its art collection? So long as it remains on display or available to researchers in the public trust, who is harmed?"
Friday, August 07, 2009
Not Off To A Great Start
The Boston Herald reports that "the [Massachusetts] Supreme Judicial Court won’t hear the lawsuit filed by three top Rose Art Museum patrons against Brandeis University .... The SJC transferred the case to the Suffolk probate court."
Thursday, August 06, 2009
"We were always more oriented toward prevention"
More from the NYT on the Roerich Museum thefts. Derek Fincham says "such a small museum is a good target for art thieves as it may not have sophisticated security systems, and limited visitors who may notice a theft."
Wednesday, August 05, 2009
"We imagine that the first hurdle the three plaintiffs will face is a challenge by Brandeis University to their standing"
The Charity Governance Blog's Jack Siegel on the recently filed Rose lawsuit:
"Under general principles of charity law, the [plaintiffs] probably lack standing: Donors lack standing. ... The donors may ... be able to argue special interest standing, but the Massachusetts Attorney General is aware of and, according to the plaintiffs' own pleadings, has been involved in the dispute. Attorney general involvement can undercut a claim to special interest standing. The three plaintiffs will undoubtedly argue that their status as members of the Board of Overseers of the Rose Museum provides them with standing. As we understand the board’s legal status, it is advisory. That fact may undercut their claim. At this point, all we can say is that both sides have sufficient facts to keep the battle over standing going for several rounds of court decisions. In the end, we bet the three will lose on the standing issue, but there are cases where donors have prevailed. See, for example, Smithers v. St. Luke’s-Roosevelt Hospital, 281 A.D.2d 127 (N.Y. App. Div. 2001)."
My initial reaction to the complaint was similar.
"Under general principles of charity law, the [plaintiffs] probably lack standing: Donors lack standing. ... The donors may ... be able to argue special interest standing, but the Massachusetts Attorney General is aware of and, according to the plaintiffs' own pleadings, has been involved in the dispute. Attorney general involvement can undercut a claim to special interest standing. The three plaintiffs will undoubtedly argue that their status as members of the Board of Overseers of the Rose Museum provides them with standing. As we understand the board’s legal status, it is advisory. That fact may undercut their claim. At this point, all we can say is that both sides have sufficient facts to keep the battle over standing going for several rounds of court decisions. In the end, we bet the three will lose on the standing issue, but there are cases where donors have prevailed. See, for example, Smithers v. St. Luke’s-Roosevelt Hospital, 281 A.D.2d 127 (N.Y. App. Div. 2001)."
My initial reaction to the complaint was similar.
"These books seem to cover everything an art professional might need to know"
In The L Magazine, Paddy Johnson reviews Heather Darcy Bhandari and Jonathan Melber’s Art/Work: Everything You Need to Know (and Do) As You Pursue Your Art Career and Jackie Battenfield’s The Artist’s Guide. I mentioned the former before here.
"If someone steals your car you can go get another one, but with a painting you can't replace it"
From the New York Post: "Brazen art thieves swiped two Russian masterpieces right off the walls of an Upper West Side museum in separate heists that police are finding as hard to decipher as an abstract painting. A cop who happened to be visiting the museum was the first to notice a work was missing from the Nicholas Roerich Museum on West 107th Street near Riverside Drive."
Tuesday, August 04, 2009
More on the Bull Suit
Nick Obourn: "The irony behind this, of course, is if Random House loses the lawsuit, the title of the book (A Colossal Failure of Common Sense) will have a deeply regretful double meaning."
Saturday, August 01, 2009
"The city's attorneys set Clearwater on a path that led to unnecessary expense, public ridicule and losses in court"
The St. Petersburg Times editorial board on the fish mural suit.
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