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produced in the United States and Europe between 1925 and 1950.
Petitioner obtained a $236,000 appraisal valuing each of the 236
films at $1,000. Petitioner claimed charitable contribution
deductions in the amounts of $74,667 and $66,513 for 1990 and
1991, respectively, and claimed a carryover charitable deduction
of $97,641 to 1992.
During the examination of petitioner's 1991 and 1992 income
tax returns, and before issuance of the notice of deficiency,
respondent utilized an in-house valuation engineer (first
engineer), who contacted petitioner's appraiser regarding the
method of valuation used in determining the $236,000 value.
According to the first engineer's report, petitioner's appraiser
determined the films' value using a comparable sales method.
Petitioner's appraiser apparently would not reveal the comparable
films to respondent's first engineer because the "sales * * *
would be illegal, since the films in question were pornographic,
and cannot be sold in the market place." The first engineer
recommended a zero value for the 236 films donated by petitioner.
Petitioner received a copy of the first engineer's report
pursuant to a Freedom of Information Act (FOIA) request by
petitioner's accountant. It is not apparent when petitioner
received the first engineer's report.
Next, respondent hired an outside independent expert
(independent expert), who valued the films in question and
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Last modified: May 25, 2011