I have a question for Diane Brenner about her appraisal example. (And
I'm not arguing; just wondering about this specific experience and
trying to integrate it into my understanding of appraisals.) Wasn't the
purpose of the appraisal to substantiate the donor's charitable tax
deduction? If so, does the I.R.S. acept this sort of business investment
value? I ask because we occasionally acquire similar collections, but
appraisers generally assess at "fair market value" (which I interpret as
"collectors' market"); business investment value would be a totally
different concept, and I'm not sure how this would be applicable to a
museum collection unless the museum wanted to use the material the same
way a commercial business would (leaving aside the whole question of
whether a museum could or should do so). I hope some legal eagles out
there can address this issue.
    Having asked those questions, I'd like to return to "fair market
value" and offer a caveat about an inconsistency I've detected in the
practices of appraisers. I assume that the photographic collections
we're discussing contain negatives, which represent relatively uncharted
territory. One of the remaining collecting frontiers in photography
involves negatives, which seldom have much collector interest, and
therefore little "market value." Even negatives by famous photographers
whose prints sell in quintuple digits seem to have little collector
interest and therefore no established market value. (I predict that this
will change eventually.) The appraisers whom I know tend to substitute
"value of materials" for items with minimal collector value, but I find
this problematic. It seems to me that materials with NO "market value"
should be appraised at ZERO. "Value of materials" does not fit the
definition of "fair market value." The inconsistency seems to exist
because you can't expect a donor to pay an appraiser to say the donation
has no value! "Historic value," of course, is not the same thing as
"fair market value" either.
      The difficulty with a large negative collection is that even
minimal numbers add up. Is it right for the donor of a collection of
100,000 commercial negatives appraised at $1 each for "value of
materials" to take a $100,000 tax deduction for stuff that NO ONE
ANYWHERE would buy for $100,000? I don't think so. And of course, if a
donor believes such an appraisal and insists on selling it at that
price, much frustration can ensue. Appraising is not an exact science,
but I'd like to see these issues explored a bit. By the way, I assure
you I'm not an IRS agent. --David Haberstich