prices paid at auction for art, furnishings, and other personal property did not reflect fair market value in that the bidders at auctions were generally wholesalers or dealers who were buying for resale
How later courts described this case
- prices paid at auction for art, furnishings, and other personal property did not reflect fair market value in that the bidders at auctions were generally wholesalers or dealers who were buying for resale
Written by the judges who cited it.
The opinion
Pierce, J., dissenting: I agree with the dissent of Judge Mulroney— to the effect that under the circumstances here present, the prices at which the several used properties were sold almost immediately following each of the three gifts thereof, constitute the best evidence of their respective fair market values on the respective valuation dates; and that such values should fix the amounts allowable to the petitioners as charitable deductipns.
Also, it is my opinion that the proof of said sales prices is the only competent evidence of fair market values in the record herein. Of the four witnesses presented by petitioners, the only one who even attempted to express an opinion as to any market values for the several properties, was Jack Shore; and his itemized appraisals (which, as compared with the prices realized through sales made by his own company, were: For 1958, appraisal $20,125 — sales price $3,015; for 1959, appraisal $21,945 — sales price $1,805; and for 1960, appraisal $20,003 — sales price $1,799.09), all were rejected by the trial judge because, as Shore conceded, they were not even intended to reflect fair market values. Also, Shore’s statement to the effect that if the properties were sold to individual buyers, “one by one * * * over an extended period,” they might yield prices approximating from 30 percent to 50 percent of his appraisals, was not related to any particular items of the several properties contributed to the charity during the 3 years involved; and also he did not express any opinion that prices so obtained would reflect the fair market values of any of the particular properties as of the respective valuation dates.
Furthermore, after the Court rejected the only itemized appraisals presented by petitioners (being those of Jack Shore), it is my opinion that the Court was not justified as a matter of law, in making its own lump-sum and nonitemized determinations of fair market value by years, on the basis of general descriptions of the properties; and in thereby arriving at stated fair market values which are not only unsupported but considerably in excess of the realized sales prices. In the leading Court-reviewed case of James Couzens, 11 B.T.A. 1040 , 1160, this Court said:
The Board and its members do not have, and are not expected to have, peculiarly expert knowledge upon the value of securities or any other of the multitudinous questions of fact which arise in the vast number of cases before it. It can only decide the issues in any case by giving judicial consideration to the evidence properly in the record. * * * The function of the Board should not be confused with that of the Commissioner of Internal Revenue. The Commissioner’s determinations are in aid of his administrative duty to see that taxes imposed are assessed and collected, and there are no methods prescribed for the ascertainment of the facts upon which such administrative determination must be based. The Board is outside this organization with a duty to hear and decide as between the taxpayer and the Commissioner upon a record publicly made in accordance with rules of evidence and procedure and subject only to appellate review by the courts of appeal. Aside from general matters well recognized as subject to judicial notice, it has in any proceeding no official knowledge except as gathered from the evidence therein, and its decision must reflect the preponderance of such evidence. * * * We approach the problem of value, therefore, not as experts with the aid of the parties, but to judge impartially oí the issue between conflicting interests, in the light of all the evidence.
[Emphasis supplied.]
Finally, tbe majority opinion is, in my view, in conflict with Philip Kaplan, 43 T.C. 663 (decided Feb. 17, 1965), and Maurice L. Rivkin, T.C. Memo. 1965-99 (decided Apr. 15, 1965). Both of these cases involved the fair market values of used properties donated to the same charity here involved, which were sold through the same sales organization, and which were appraised by the same witness, Jack Shore.
For all the foregoing reasons, I respectfully dissent.
Mulroney, J., agrees with this dissent.