Conrad Janis and Maria G. Janis - Page 6

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          bulk sale, and (3) the gallery buyer’s taking into account the              
          cost of maintaining the business for a reasonable period.                   
               The Form 706 was examined by the Internal Revenue Service              
          (IRS).  In order to determine whether the correct value had been            
          reported for the gallery on the Form 706, the IRS Art Advisory              
          Panel (Panel) examined the collection.  The Panel reviewed 227 of           
          the 464 works of art in the collection, which represented 95                
          percent of the collection’s undiscounted value as determined by             
          Sotheby’s.  The Panel accepted the values determined by Sotheby’s           
          for the remaining works of art in the collection.  Based upon               
          this review, the Panel determined that the undiscounted value of            
          the collection was $36,636,630 rather than the $25,876,630                  
          undiscounted value that had been determined by Sotheby’s.  The              
          Panel determined the collection’s undiscounted value by adding              
          the undiscounted values that it had determined for each work of             
          art in the collection.                                                      
               The Panel determined that the discounted value of the                  
          collection was $22,955,077.  In determining this value, the Panel           
          considered the various discounts that had been applied by                   
          Sidney’s estate.  While the Panel did not entirely agree with the           
          discounts claimed by Sidney’s estate, the Panel did agree that              
          the application of a blockage discount was appropriate.  The                
          Panel gave the following explanation as to the factors that it              








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