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Poor Return Preparation Voids Deduction For African Art



Earlier this month, Heinrich Schweizer got bad news from my favorite Tax Court judge Albert Lauber, “Scholar Al” as Lew Taishoff has dubbed him. Lauber ruled that Schweizer’s failure to meet the disclosure requirements for a charitable contribution of property was not “due to reasonable cause”. The opinion illustrates Reilly’s Fourth Law of Tax planning – Execution isn’t everything, but it’s a lot – with a shoutout to the Seventh Law – Read the instruction. The larger story behind the story of the piece of art given to the Minneapolis Institute of Art at a $600,000 valuation is inherently more interesting than the tax story, but that is the curse of being a tax writer.

The Gift

You can see the gift here – a wooden sculpture of a male figure originating from the Dogon people of Mali estimated to be about 250 years old. It is less than two feet tall. The gift was in honor of William C. Siegmann who had been a Curator of the Arts of Africa and the Pacific Islands at the Brooklyn Museum. Siegmanm, who died in 2011, had fallen in love with African Art while a Peace Corps volunteer in Liberia in the mid-sixties.

Schweizer is an authority on African art. Before founding his firm Schweizer Premodern, he was Director of African and Oceanic Art at Sotheby’s. During his tenure, the value of Sotheby’s annual auction of African art went from $2 million to $55 million.

According to the opinion, Mr. Schweizer had acquired the Dogon sculpture “allegedly” in Paris for $100,000 in 2003. Somehow this disturbed me and sent me down something of a rabbit hole. I mean “Why Paris?”. You can get the short answer from this 2012 piece by Dr. Kwame Opoku – More Dogon artefacts are in the Musée du Quai Branly than in Mali’s national museum.

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“Malian cultural heritage has for several decades, undergone a massive transfer toward Europe and the United States. Analyzing the phenomenon in its universality, it seems very clearly to be the translation of an unequal relation between poor (weak) and wealthy (powerful) nations. The cultural assets of poor nations are being exported to rich nations. Examples to the contrary do not exist”.

This issue has become more and more prominent as you can see from this story by Jason Farago about President Marcon speaking about temporary or permanent restitution of African art in French collections. On Schweizer’s watch in 2010 Sotheby’s cancelled a sale of a Benin ivory pendant mask amid allegations that it had been looted during the Benin Expedition of 1897.

The Return And Audit

Out of professional courtesy I will not name the not very large firm that among other things focuses on foreign nationals or the enrolled agent that works for them that handled Schweizer’s return. I will just refer to them as the firm and the preparer. Schweizer, an immigrant from Germany, hired the firm to prepare his first US tax return in 2007 and was still with them for his 2011 return.

In June of 2012 the preparer helped Schweizer request a Statement Of Value from the IRS. This puts the valuation in the hands of art experts (AAS unit), who don’t know whether the valuation is being done for a charitable donation, where the taxpayer wants the value high, or for transfer tax purposes, where the taxpayer want the value low. The package that went to AAS included an appraisal coming in at $600,000 but the appraiser’s qualifications were dubious.

They had not heard back from AAS by the time the return was due so the return went in with a $600,000 deduction. The required From 8283 was a mess:

The Form 8283 appended to petitioner’s 2011 return was missing most of this information. The Dogon sculpture, for which a $600,000 value was claimed, was listed on section A of the form, where taxpayers are instructed to report “Donated Property of $5,000 or Less and Certain Publicly Traded Securities.” On the line calling for a “[d]escription of donated property,” the words “SEE ATTACHED” appeared. But no such attachment was included in the return. Section B of the form was left entirely blank; petitioner thus supplied no information as to the acquisition date or manner of acquisition, and he failed to supply a summary of the sculpture’s physical condition. The signature lines, where the appraiser and an MIA officer were supposed to affix their signatures, were left blank. And petitioner did not attach to his return an appraisal of the artwork as required by section 170(f)(11)(D) for gifts valued in excess of $500,000.

There is dispute about whether Schweizer came to the firm’s office to sign the return of had it sent to him. More significantly is the dispute over whether Schweizer discussed the Form 8283 with the preparer. In Schweizer’s version he noticed the issues and the preparer told him that there was nothing to worry about because of what had been sent in with the request for a Statement Of Value.

IRS selected the return for audit. In its notice of deficiency the primary position was that no deduction at all was allowed due to failure to satisfy statutory and regulatory substantiation requirements. The secondary position was to reduce the deduction to $250,000.

The Opinion

Judge Lauber had ruled on summary judgment that Schweizer had failed to meet the disclosure requirement having failed to attach either a fully completed Form 8283 or an appraisal of any kind. What remained to be determined was whether the failure was due to “reasonable cause”.

Schweizer’s position was that he relied on the advice of the preparer that it was unnecessary to include the appraisal or a fully complete Form 8283. Judge Lauber found no credible evidence for that advice having been given and further that it would have not been reasonable to rely on that advice if it had been given. The preparer did testify and his testimony did not substantiate Schweizer’s testimony. Of course his memory of what exactly had happened eleven years ago trying to push out one more return as October 15 loomed was not that sharp. Judge Lauber gives the profession a lot of credit, perhaps more than we deserve when it comes to that crunch time.

And if petitioner had (as he testified) brought the defective Form 8283 to ——————- attention, we find it implausible that ————-. ————, an experienced return preparer, would not have retrieved from his files the substantially complete Form 8283 that he had previously submitted to the AAS unit.

Judge Lauber goes on to note that this was not Schweizer’s first 8283 rodeo so even if the preparer gave him the bad advice, he should have known better. So no deduction.


I don’t know how long it usually takes to hear back from the IRS on art valuation, but it would seem that the wise thing to do is to give them as much time as possible, if you are going that route. This is of course one of many opinions that emphasize the importance of meticulous compliance with donations of valuable property. It is also a rather strange story in that Schweizer’s counsel did not seem to be able to craft a narrative that would have his and the preparer’s stories line up. We will probably never have a way of finding out, but I have to wonder if the firm’s malpractice carrier is sweating this out now.

Other Coverage

Michael Auliso did an interview with Schweizer in 2012 that is available on

It is kind of ironic, given the name of the publication that Scweizer remarks:

What amazed me when I entered this field was that most people were still calling it “tribal art.” ………….There is no doubt that the term “tribal” is a historically contingent or quasiimperialist remnant of the colonial era. It is the result of a Western imperial perspective with condescending overtones and reveals a unilateral view on civilizational progress.

Matthew Erskine has How To Avoid Losing A $600,000 Charitable Deduction on

It may seem unfair to deny a deduction just because a form was not filled out correctly, and perhaps it is, but it is not unfair to require that when you do sign a tax return, you have exercised at least ordinary care and prudence in what you are claiming in that return.


Ever have a witness tell you not to call him, because his testimony would sink your client? Oh yes.

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Who is the wealthiest person at Art Basel? This ATM is displaying users' bank balances for all to see – CNN



Written by Jacqui Palumbo, CNN

After cutting up a $30,000 Damien Hirst print, getting into a (now settled) legal entanglement with Nike over custom Satan sneakers and sending Grimes to the Met Gala with a sword made from melted-down guns, Brooklyn art collective MSCHF is now daring the wealthiest attendees of Art Basel Miami Beach to reveal themselves.

“ATM Leaderboard,” the group’s latest work, is a working ATM that displays the cash balances of anyone who uses it for the entire art fair to see. It ranks users — with photos captured by the ATM’s camera — according to the size of their bank accounts, like the high scores of a classic arcade game.

Currently top of the “ATM Leaderboard” is an individual with a $2.9-million account balance, according to MSCHF. (A video of the ATM’s display screen, taken by an attendee, shows a bearded man in a pink T-shirt alongside the seven-figure sum; the timestamp shows he has held the number one spot since Tuesday.)

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"ATM Leaderboard," a new art piece from the Brooklyn-based collective MSCHF, asks Art Basel Miami Beach attendees to put their money where, well, their money is.

“ATM Leaderboard,” a new art piece from the Brooklyn-based collective MSCHF, asks Art Basel Miami Beach attendees to put their money where, well, their money is. Credit: MSCHF

At Art Basel Miami Beach, where the art world converges for a week of fairs, lavish parties and music festivals, artworks regularly sell for millions of dollars.

“‘ATM Leaderboard’ is an extremely literal distillation of wealth-flaunting impulses,” Daniel Greenberg, co-founder of MSCHF, told CNN in an email. “From its conception, we had mentally earmarked this work for a location like Miami Basel, a place where there is a dense concentration of people renting Lamborghinis and wearing Rolexes. These are analogous implicit gestures to the ATM Leaderboard’s explicit one.”

The project is a joint effort between the art collective and Perrotin Gallery, which also represents Maurizio Cattelan, the provocateur whose banana-taping antics at Art Basel in 2019 created a multi-day frenzy at the annual fair.

Perrotin is currently hosting MSCHF’s debut show at its New York gallery, describing the group as “a conceptual collective whose elaborate interventions expose and leverage the absurdity of our cultural, political, and monetary systems.”

On display are “wavy” versions of classic sneaker silhouettes (an earlier version of which is subject to an ongoing lawsuit from Vans); swords from the “Guns2Swords” project; a three-dimensional model of Jennifer Lopez, constructed from paparazzi photos of her leaving a dance class; and one of Boston Dynamics’ “Spot” robots rigged with paintball guns. (The engineering company condemned the latter project and disabled the robot through a backdoor, according to the exhibition.)

As to where the ATM may pop up next, Greenberg said that’s up to whomever wants to acquire or borrow it. Top scores will remain on the leaderboard after each showing, arguably raising the stakes for subsequent users.

“Because of the camera, the ATM keeps a continuous record of each person who uses it and also each location that it is installed, so we hope that it will have an opportunity to move through more spaces,” Greenberg explained.

If you have a cool $3 million in cash (or more) sitting in your bank account, and want the world to know it, you can visit the ATM at Art Basel Miami Beach through Saturday.

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Art Basel Miami Beach Sales Heat Up Despite Current Crypto Winter – BNN Bloomberg



(Bloomberg) — What a difference a year makes.

Just 12 months ago, with the price of Bitcoin hovering around $57,000, it seemed that Art Basel Miami Beach was in fact a crypto celebration with an art fair on the side. At the time, the NFT craze was in full swing, and the medium’s many proponents were bent on establishing it as on a par with such traditional art forms as painting and sculpture. In tandem with the City of Miami’s all-out push to become a crypto capital, Art Basel Miami Beach had become a ripe venue for digital art patrons and crypto companies to stake their claim as forerunners of a new establishment.

Now Bitcoin is trading around $17,000, and the excesses of 2021—think crypto- sponsored yacht parties, NFT stunts, Web3 conferences and metaverse ragers—are mostly things of the past. Holdouts include the blockchain company Tezos, which is an Art Basel Miami Beach partner again and has sponsored a series of talks at this fair. But on the whole, art is front and center once again this week in Miami.

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It’s a turn of events that many in the art market are greeting with something bordering on relief.

“It’s the post-FTX world,” says New York dealer David Lewis in his booth on the fair’s opening day, referring to the collapse of the crypto exchange founded by Sam Bankman-Fried. “The art world has always been really wary of the crypto world,” a wariness, he says, that appears to have been justified. “I think there’s a lot of comfort in the fact that a lot of the ways of doing things that have been going on for years or decades—or if you think of painting, centuries—are back in the lead.”

As Art Basel Miami Beach (ABMB) opens its doors to a VIP crowd celebrating the Florida edition’s 20-year anniversary on Tuesday, Nov. 29 (VIP days Tuesday and Wednesday, with public days following through Saturday), it certainly feels as if analogue is ascendant. Many of the fair’s 282 galleries seem to have brought textile works and heavily layered paintings to the fair—“definitely things with texture, things that appear handcrafted,” says adviser Suzanne Modica, noting that she has yet to see the entirety of the fair. “I think the quality is quite good,” she says. “People have brought works to sell.”

Healthy Sales

In the first three or so opening hours, sales seem to be happening at a steady clip.

This is partly the result of a healthy amount of pre-selling, a phenomenon in which a gallery sends a PDF to clients containing artworks it intends to bring to the fair. Those clients might then put a work on reserve (or even better for the dealer, buy it outright), and consummate the transaction after viewing the work in the first few hours of the fair.

“We pre-sold a lot, so the first hour or two is people seeing the pieces,” says Malik Al-Mahrouky,  a sales director at Kurimanzutto, a gallery with locations in New York and Mexico City. Its pre-sales included, he says, a painting by Gabriel Orozco priced around $500,000 and two paintings by Roberto Gil de Montes, which sold for roughly $85,000 and $35,000. While English was far and away the dominant language heard in the fair’s aisles, Al-Mahrouky says he is surprised by the number of serious foreign collectors. “There are lots of Europeans this time around,” he says. “Last year there weren’t nearly as many.” 

One collector with works on reserve is Pete Scantland, the Columbus, Ohio-based chief executive officer of Orange Barrel Media, who says that while he “wanted to show up at the fair and be surprised,” he couldn’t help himself and “did peek at a few of the PDFs.”

Even before the fair began, Scantland purchased a work by Igshaan Adams, an artist known for lavish tapestries on view in Casey Kaplan Gallery’s booth. For the most part, Scantland says, he spent the first few hours of the fair just looking around. “Leslie Martinez, who’s showing at And Now gallery’s booth—I’d seen images of her work, but to see them in real life? That’s what it’s about,” he says.

Looking Ahead

The art fair comes on the heels of New York’s November auction season, where a few record-setting weeks nevertheless showed signs of slackening demand. The spotty bidding on view was attributed by some to jitters over the prospect of global recession.

Multiple dealers wonder if such fears will trickle down (or flow sideways?) into the rest of the market. “I think every dealer in the world asks themselves that question,” says the dealer and former Goldman Sachs partner Robert Mnuchin. “Has it, is it or will it? And I think the answer is none of us know at the moment.” His major takeaway from the November auctions, he continues, is that “the strongest part of the market was the outstanding works. Anything that was outstanding, almost irrespective of the price—not totally, but that was the predominant desire.”

Given the size of the fair and breadth of its offerings, it would be a stretch to say that most of the work at the fair is outstanding. But at the end of the first day, multiple galleries reported major sales. Mnuchin says he sold a large work by El Anatsui for $1.75 million. Gladstone Gallery reports selling an Alex Katz painting for $1.2 million. And Jack Shainman Gallery says it sold a 1997 painting by Kerry James Marshall for $2.8 million.

Indeed, as Miami enjoys yet another week filled with parties, art fairs, product launches and yes, a few crypto-related events, it seems that rich people are still spending money, with not so much going to digital art.

“It’s lovely to not have this kind of crypto frenzy,” says Kibum Kim, standing in the booth of his buzzy gallery Commonwealth and Council. “It’s just more calm, and there are more conversations about art. No one is sticking a phone into our faces trying to show us their digital wallet.”

So does he—or did he—have any crypto-rich clients? “Of course not,” Kim says. “We’re a serious gallery.”

©2022 Bloomberg L.P.

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Natalia Goncharova Earned Her Place In Art History



Natalia Sergeevna Goncharova’s cubist-futurist painting La Gare (train Station) fetched €963,000 (more than $1 million), surpassing the €500,000 to €800,000 estimate at auction this year.

At the turn of the 20th century, two wildly talented and rebellious students, Goncharova and Mikhail Fyodorovich Larionov, met at the prestigious Moscow Institute of Painting, Sculpture and Architecture. They quickly became partners, sharing both a studio and a living space, and the art world was never the same. As founding members of the Jack of Diamonds, Moscow’s first radical independent exhibiting group, the lovers and collaborators struck a mighty fist through the firmly settled foundation of Russian art. Always stirring controversy while creating revolutionary works, the couple settled in Paris where they spent the rest of their lives.

Goncharova, a Russian avant-garde artist, painter, costume designer, writer, illustrator, and set designer, was also a founder — along with fellow Russian artists Wassily Kandinsky, Alexej von Jawlensky, and Marianne von Werefkin, and German artists Franz Marc, August Macke, and Gabriele Münter —of another radical art movement known as Der Blaue Reiter. Born July 3, 1881, in Nagaevo, Tula Governorate, part of the Russian Empire, she died Oct. 17, 1962, in Paris.

A pioneering avant-garde Russian painter, Larionov was also a founding member of an even more radical, but short-lived, group called Donkey’s Tail, which included Goncharova, as well as Kazimir Malevich, Marc Chagall, and Aleksandr Shevchenko. They were influenced by the Cubo-Futurism movement, and the group’s lone exhibition was held in Moscow in 1912.

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Larionov, who was influenced by the Georgian artist Niko Pirosmani, painted in the style of Impressionism starting in 1902, and after visiting Paris four years later, he shifted to Post-Impressionism and then to a Neo-primitive style, partly derived from Russian sign painting. In 1908 he staged the Golden Fleece exhibition in Moscow, which included paintings by Matisse, Derain, Braque, Gauguin, and Van Gogh.

Together, Goncharova and Larionov developed a groundbreaking style of abstract art known as Rayonism, after hearing a series of lectures about Futurism by Filippo Tommaso Marinetti, an Italian poet, editor, art theorist, and founder of the Futurist movement.

Goncharova’s father, Sergey Mikhaylovich Goncharov, was an architect and also graduated from the same Moscow Institute where she and Larionov fell in love.

In 1915, Larionov left Russia to work with ballet owner Sergei Diaghilev in Paris on the the Ballets Russes, gaining French citizenship and never returning to his homeland. He was born June 3, 1881, in Tiraspol, Kherson Governorate, part of the Russian Empire, and died May 10, 1964, in the Paris suburb Fontenay-aux-Roses.

Fifty-five years after his death, the Tretyakov Gallery in Moscow hosted the first major Larionov retrospective in Russia, divided into a Russian section featuring mostly paintings, and a French section, including paintings as well as a large collection of his graphic works, many on public display for the first time. The French portion also displays his works from the Ballets Russes, along with works of other artists from his private collection.

Larionov’s delightful “A Stroll in a Provincial Town” (circa 1909) is feverishly inspired by his first visit to Paris in 1906. The vibrant and bold colors depict a flamboyant and carefree lifestyle that is undoubtedly refreshing to a Russian native. The diversity of his work is stark in the Tretyakov Gallery exhibition which features this painting.

Meanwhile, in London, watercolors by Goncharova, including three of her costume designs estimated to fetch between £600 ($771) and £800 ($1,029), are going on the block at Dawson’s Art, Antiques and Jewelry sale on Jan. 19.

Her work is part of Russian art and objects dealer Christopher Martin-Zakheim’s extensive collection from his former shop Iconastas in Piccadilly Arcade. Martin-Zakheim was diagnosed with a brain tumor and consigned the remaining stock of his beloved store when it closed last year. He died on Dec. 25, 2018.

The regal Iconastas opened in 1974, specializing in Russian Art from the beginning of Christianity to the end of Communism. It’s where well-heeled international collectors would find everything from Orthodox Icons and crosses created from the 16th century until the 1900s, to Soviet porcelain figures from the 1920’s, or precious pieces by Faberge.

More than half a century after their deaths, Goncharova and Larionov continue to intrigue and shock the art world, sometimes in curious ways.

“Still Life with Teapot and Oranges” was, for more than 50 years, believed to have been painted by Larionov, but Aleksandra Babenko, an Associate Specialist in Russian Art at Christie’s, discovered that it had been painted by Goncharova. It sold at Christie’s in November 2017 for £2.4 million ($3.1 million).

‘The minute I saw the painting in the flesh, it took my breath away,” said Babenko. ‘The vividness and boldness of its colors, the accentuated ultramarine outlines, and the audaciously angled composition — all exemplified the youthful fervor and rebellious mood within Moscow’s artistic community in the early 20th century.”

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