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underlying basis for the attached appraisal. We have
valued these works of art on an individual basis as of
the relevant valuation date.
Furthermore, we have not taken into account any
dealer’s discount. It is common practice in the trade
for a gallery to sell a work to another dealer at a
discount ranging as high as 40% off the value in the
retail market and, more commonly, in the one third
range, so that the dealer may make a profit on resale.
Lastly, we have not undertaken to determine the
value of the Gallery as a whole. * * *
Based upon its review, Sotheby’s determined that the undiscounted
value of the collection was $25,876,630.
Sidney’s estate determined the discounted value of the
collection by first applying a discount totaling $4,059,540 to
account for the large number of works in the collection by Jean
Arp, Louis Michel Eilshemius, Auguste Herbin, Morris Hirshfield,
Piet Mondrian, Grandma Moses, and Kurt Schwitters. This discount
had been recommended by Sotheby’s. Next, a $350,000 discount was
applied to account for the gallery’s partial interest in three
works of art in the collection. A $2,862,279 discount was then
applied to account for the portion of the collection that would
likely be sold in the dealer market (as opposed to the retail
market). Finally, a $6,201,604 discount was applied to account
for (1) the inability to sell the gallery in the retail market
for individual works of art, (2) the gallery buyer’s not paying
the full resale price of the underlying assets acquired in the
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