The Taxman Loseth

The old grad gives 100 shares of stock worth $8,187 to his alma mater and deducts $8,187 from his income tax. The merchant donates a $99.50 TV set to a hospital and deducts $99.50. But what about a work of art that hasn't gone through an auction? Who knows its current worth? The problem was put to a covey of "qualified experts," testifying under oath before a federal jury in Texas. Their estimates, as they tried to fix the value of a single painting, ranged from $20,000 to $500,000.

The painting in question was a 15th century altar triptych called the Retable of Puget. It had been bought from a Paris dealer in 1959 for $300,000 by Mrs. Sarah C. Blaffer, now 83, the widow of one of the founders of the Humble Oil & Refining Co. In 1960, Mrs. Blaffer donated the triptych to the Houston Museum of Fine Arts* and, to determine her tax deduction, called in three appraisers. Their middle figure was $425,000 (a rise of $125,000 or 40% in one year), which Mrs. Blaffer claimed on her return.

The IRS challenged her evaluation, brought in depositions from a leading Paris art dealer and three Louvre officials who called the triptych a "relative mediocrity" worth at most $20,000 to $25,000. In support of Mrs. Blaffer, her lawyer lined up eight different experts including New York Dealer Spencer Samuels; James White, director of Ireland's National Gallery; and Economist Richard Rush, author of Art as an Investment. These witnesses argued that, given the rarity of the piece and the rising art market, the triptych was worth $400,000 to $500,000.

The jury took just 35 minutes to side with Mrs. Blaffer, ordered the Government to refund her $108,000 in taxes, plus $17,000 in accrued interest. Not that Mrs. Blaffer really needs the money. Explained a friend, "It wasn't that at all. She appealed mostly, I think, because she was incensed at the Internal Revenue Service's low-rating such a fine piece of art."

* Whose Robert Lee Blaffer Memorial Wing was donated by Mrs. Blaffer's son and daughter-in-law to house their mother's collection.

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