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considered in reaching its decision to apply a blockage discount
to the undiscounted value of the collection:
In general, a blockage discount is applied to
property in an estate in an attempt to reflect the
market’s response to a large number of items.
Traditionally, as the cases of David Smith, Louisa
Calder and Georgia O’Keeffe attest, a blockage discount
is applicable in response to a large number of works by
one artist, usually in an artist’s estate. The Estate
of Sidney Janis is not an artist’s estate, and does not
involve a large number of works by one particular
artist, but rather works by many different artists.
However, since it is a valuation problem involving a
gallery inventory, some of the general principles are
applicable.
A number of factors have been considered in
determining whether a blockage discount is appropriate
and to what extent it should be applied to the subject
properties. Consideration was given to the prominence
of the artists; the types of works in the estate; the
distribution of the items (for example, the number and
types, and their quality and saleability); the number
of similar items available in the marketplace; the
market’s response to such works around the valuation
date; the number of sales and the prices at which sales
were made during the period immediately preceding and
following death; the annual sales of the gallery;
length of time necessary to dispose of the items; the
works that are saleable within a relatively short
period of time; the works that can only be marketed
over a long period; the demonstrated earning capacity
of the business; the tangible and intangible assets,
including goodwill; and, the reputation of the gallery
and the provenance.
In addition, consideration was given to the
possible disbursement and handling of the gallery. One
option would be the continuation of the gallery through
Sidney Janis’ surviving sons and the selling of the
items in the course of business. Another option would
be the sale of the gallery to a willing purchaser.
Attention was given to the gallery’s annual gross
and net receipts of the inventory since 1985.
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