65:, which averaged 60%. Instead, the court applied an average discount of 25%. The court failed to articulate the specific rationale for its determination, but did state that Warhol was more famous than Smith & O'Keeffe. The court's application of an average discount of 25% has been criticized by attorneys and appraisers because, inter alia, it ignored the necessary time it would take to sell 90,000 pieces of art. Therefore, accountants and estate planners for artists plan with such eventualities in mind.
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died he had over 90,000 works, including 4,100 paintings, 9,000 drawings, 19,000 prints and 63,000 photographs. In
Georgia O'Keeffe's case, her estate's appraisers established blockage discounts based on solid evidence of market sales, but the
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A blockage discount adjusting fair market value also affects the tax consequences of a sale in the U.S., and is frequently a subject of litigation when an artist dies while holding a large collection of her or his own work. For instance, when
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assessed a resulting tax of more than the valuation of the collected works at her death. In Andy Warhol's case
Surrogate Court of New York rejected the proposed discounts of
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assigned to a group of artworks by a single artist when that group of works is to be released to market as a group rather than individually. A blockage discount adjusts the
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The Heirs of George Grosz Battle His Dealer's Ghost; A Protracted
Lawsuit Outlives Its Target, But Not Its Anger
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are relevant factors for consideration in blockage discounts, along with
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In re Warhol, No. 824/87, 1994 WL 245246 * 1 (Surr. Ct., N.Y. Co. 1994).
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135:
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when a large volume of art is released into the market all at once.
176:
Art Law: The Guide for
Collectors, Investors, Dealers, and Artists
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died she had over 400 of her own works in her estate, and when
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Inde, Vilis, Art in the
Courtroom, Praeger, 1998, p. 158.
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Saliba, R. Gary; Chung, Jason; Hall, Thomas (March 2004).
165:, 24 A.D.3d 264, 806 N.Y.S.2d 498, 500 (1st Dep’t 2005).
198:"Credit Guaranties: Fair Value and Fair Market Value"
178:, Practising Law Institute, 1998, p.1157 et seq.. (
267:Valuation of Art Objects for Estate Tax Purposes
31:of the works downward because of the risks of
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256:, Planned Giving Design Center, LLC. 2009.
293:, The New York Times, August 27, 2001.
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19:is an art-business-related and legal
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278:Lerner and Bresler, pp. 1354, 1364.
254:Establishing a Value is Important!
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57:used its own valuation and the
269:, The CPA Journal, 09/02/2002.
1:
163:Grosz v. Serge Sabarsky, Inc.
23:for referring to the money
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214:10.5791/0882-2875-23.1.25
202:Business Valuation Review
68:The IRS has stated that
306:Business of visual arts
174:Lerner and Bresler,
121:Art world economics
285:External resources
98:Visual arts portal
243:978-0-275-95971-5
74:opportunity costs
29:fair market value
17:Blockage discount
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208:(1): 25–30.
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33:depreciation
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106:Art finance
50:Andy Warhol
21:term of art
142:References
111:Art market
63:Christie's
39:Tax issues
222:0897-1781
59:Tax Court
300:Category
289:Wadler,
126:Art work
84:See also
25:discount
136:Tax law
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239:ISBN
218:ISSN
180:ISBN
72:and
210:doi
55:IRS
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