Appraising in a Pandemic

Over the past month, our firm has received a number of inquiries for appraisal services and sales advisory.  Like so many right now, Thompson & Martinez and the appraisal profession has had to adapt to the “new normal” of working from home. Appraisers typically prefer to do an in-person inspection of a property or collection for any given project. Occasionally if the property or collection is outside of our region, we will work with another appraiser in that region to “be our eyes” as the inspector.  Now, because of shelter-in-place policies around the country, appraisers are, by and large, unable to inspect in person. However, governors of the three accreditation societies (ASA, AAA, ISA), have advised appraisers that depending on the appraisal purpose and property, inspections can be carried out “remotely” with clients providing information on their property such as artist, medium, date, dimensions, signatures, and taking high quality and detailed digital photographs. Please click on Consultation Request  to begin this process. 

Wishing you health in this uncertain time. 

 

Lydia Thompson on the challenges and opportunities of the Chinese art market

Recently Lydia Thompson, a principal of Thompson & Martinez Fine Art Appraisals, and expert on Chinese art taught a webinar The Chinese Art Market: Challenges and Opportunities on behalf of the American Society of Appraisers. Drawing on more than 25 years in the Chinese art field, Dr. Thompson provided historical context for the tremendous growth of the market in the past 20 years, the pitfalls of appraising Chinese art as well as the opportunities. To learn more about the topics addressed, please visit: Q&A with Dr. Lydia Thompson

The Tax Cuts and Jobs Act of 2017, Some Things for Art Collectors to Consider

In late 2017, President Trump signed into law, the Tax Cuts and Jobs Act, which went into effect on January 1, 2018. Tax attorneys and accountants are in the process of unpacking this law, and how it affects their clients’ personal and business interests. Personal Property appraisers, those of us who value a wide range of tangible assets, including fine art, rare books, collectibles, jewelry, automobiles and yachts among many other things, also need to understand how this will affect our clients, from the perspective of estate planning, donation, gifting, inheritance and sale.  As is commonly known, the 2017 tax reform bill doubles the exemptions for estate tax up to $11.2 million for individuals and $22.4 million for a couple. For the vast majority of U.S. citizens, this will eliminate the need for an appraisal for estate tax calculation.

For those whose estates have an overall value above this new federal exemption threshold, beneficiaries will still need a Fair Market Value appraisal, as of the date of death, of their personal property. For example, a painting by an artist like Jean-Michel Basquiat (1960-1988), purchased by the deceased in 1985 for $10,000 will, given the exponential growth in Basquiat’s market, be worth significantly more in 2018. This stepped-up basis is not only required for estate tax calculation but also for any possible future sale and reporting for income tax. If the painting is sold for $200,000 in 2019, the 28% capital gains tax will be based on the 2018 appraised value rather than the 1985 purchase price. The tax basis of any gifts of personal property transferred within a family, say from mother to daughter while the mother is still alive, is subject to the donor’s tax basis not the donee’s. It may be worth delaying such a gift in order to obtain the after death stepped-up in basis tax benefit.

When it comes to your art collection, these are just a few things to consider in light of the tax reform bill. And remember, the federal estate tax exemption levels are set to expire at the end of 2025, reverting back to the 2017 levels.