THE VALUATION OF STOLEN ART TREASURES
FOR ESTATE TAXATION PURPOSES
Law & Valuation
Text of Paper
Artwork is very difficult to value. This is for several reasons. First, there is no main exchange where art is traded. Second, each piece of art is unique, so there are not really any comparables. Finally, the worth of a piece of artwork to a particular person is very subjective. For these reasons, experts must be used to establish the value of a piece of art, supposedly using objective criteria to determine a very subjective result. When someone dies, any artwork included in the estate must be appraised, and then accounted for in estate taxes, which can be a complicated process. This process is further complicated if the artwork was stolen.
1. How is art to be valued for estate taxation purposes?2. What if the art to be valued is stolen?
1.Art is to be valued typically by an expert appraisal, which is to determine the fair market value of a piece of art in a market context.2.The appropriate market(s) must be determined, which may include illicit markets, and then the value of the interest passed on to the heirs must be determined. From this, the fair market value can be determined, and estate taxes determined.ANALYSIS
The Internal Revenue Code and Regulations do not provide any rules on how to value art or similar kinds of property for estate tax purposes, except to provide that property should be valued at its fair market value, which is the price a willing seller would receive from a willing buyer in a market context. A market in the art world might be a private sale, gallery sale, or an auction, so long as a buyer would pay a comparable price in any of these situations, although this may vary for each specific situation and type of art. The Regulations do provide that for property with a marked artistic value, an expert appraisal should be filed with the tax return. However, stolen art may present difficulties with regard to valuation for estate tax purposes.
The situation involving the Quedlinburg art treasures provides an interesting application of the valuation of art for estate tax purposes. During World War II, while stationed in Quedlinburg, Joseph Meador stole German art that he was supposed to be guarding by mailing it to his mother back in the United States. During his lifetime he gave some pieces away, sold some, and used the proceeds to lead a life of luxury, while filing tax returns that did not report all of this. When Meador died, his brother and sister received his estate, and filed an inventory of his estate which failed to include any art. The brother and sister then proceeded to have several pieces appraised and attempted to sell several pieces, even after being told that it was stolen. Eventually they were discovered, and Quedlinburg sued to recover its stolen property. The stolen treasure was valued at being worth between $50 million and $100 million.
The IRS issued a Technical Advice Memorandum (TAM) to address the issue of valuation of the stolen art for estate tax purposes. The Meadors’ counsel argued that since there was no legitimate market for the art since it was stolen, then it was not worth anything for estate tax purposes. The IRS countered that illicit markets are sufficient for determining the value of the art for illegally obtained property. However, with regard to art, legitimate markets should also be taken into consideration as legitimate dealers were willing to buy the art from the Meadors even though they knew that it was stolen. The IRS then assigned a 10 year term-of-years to the art, as there was possession by the heirs for 10 years after the decedent’s death and determined the present value of the right to use $1.00 for 10 years, which is approximately .55, and applied this to the value of the artwork to determine the interest passed on to the heirs at the decedent’s death, which is 55%. The IRS refused to allow a deduction for stolen property claims filed against the heirs, because too much time had passed since the estate was distributed.One problem which the IRS did not directly address was that of who could realize the value that it was assigning to the artwork. The true owner and a thief would be unable to receive the same value for the artwork, regardless of which market was used. Another problem is whether the IRS was correct in using the term-of-years valuation. Art does not inflate and deflate the way that money does, and should not be valued as though it does. Also the inefficiency and unreliability of art markets should have been taken into account, legitimate and otherwise. Finally, the final outcome of the situation, the claims made by Quedlinburg, should not affected the valuation. An appraisal should have been done of the art itself, not the situation surrounding it, other than the fact that it was stolen. Thus, the valuation of any artwork for estate tax purposes is complicated, but it is even more so when the artwork is stolen.
I. IntroductionStephen E. Weil said:
The story of how art and the law came to be related is, in some respects, another tale of...an unnatural coupling ?? another story, if you will, of beauty and the beast....At the start it was money ?? or, rather, disputes over money ?? that first began to bring art into the embraces of the law. Whatever else it may be in terms of human aspiration and accomplishments, a work of art is also property ?? a bundle of property, in fact ?? and the right to this property may involve considerable sums ... the law must be called upon to remedy the abuses and resolve the contention.
Like all property, art has value. However, art is not as easily valued as other types of property. For instance, stock, regularly traded on an established, efficient stock exchange is relatively easy to value objectively by reference to sales of identical stock on or near the valuation date. Art, on the other hand, offers no such objective standard. Each piece of art is unique: sales of the particular work to be valued, or of comparable pieces, may occur infrequently. Also, art, unlike most property, has no intrinsic value. As John Steinkamp writes, “It has been suggested that art ‘prices float more or less aimlessly’ and that only critics who succeed in redirecting general tastes are able to profit from their judgment.” Moreover, any comparables may not really be comparables—they may have much different values than the item to be valued, and they may have sold at a private sale, gallery, or auction, all of which would have a different effect on the sale price. As a result, expert opinions usually must establish the value of art. While experts are supposed to be objective, basing their appraisals upon apparently objective criteria, expert valuation of art is an inherently subjective process, and opinions can vary dramatically.
These factual difficulties in valuation of art (i.e., its subjective nature) intersect with difficulties of valuation in law in the Federal Estate Tax arena. This intersection becomes even more treacherous when one adds the factor of the art in question being stolen. In this paper, I will explore this convergence of art, law, and valuation. First, I will examine the relevant Internal Revenue Statutes, Regulations, and case law to the valuation of property, specifically, art, in estate taxation generally. Then, I will look at how this law is applied to a unique and interesting situation—the valuation of the stolen Quedlinburg art treasures.
II. Valuation for Estate Tax PurposesSection 2031 of the Internal Revenue Code states “[t]he value of the gross estate of the decedent shall be determined by including to the extent provided in this part, the value at the time of his death of all property, real or personal, tangible or intangible, wherever situated.” The statute goes on to provide for the valuation of certain specific types of property, but does not mention art or similar kinds of property. The Internal Revenue Regulations do not offer much more help. Subsection (b) of § 20.2031-1 states “[t]he value of every item of property includible in a decedent’s gross estate under sections 2031 through 2034 is its fair market value at the time of the decedent’s death,” unless the executor elects the alternate valuation method under § 2032. The regulations define fair market value as “the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.” The regulation goes on to state that value is not to be determined by a forced sale price, and it is not to be determined by the sale price of the item in a market “other than in which such item is most commonly sold to the public, taking into account the location of the item wherever appropriate.”
Thus, looking at the materials promulgated by the Internal Revenue Service, one should determine the fair market value of art by reference to a hypothetical sale in the marketplace. What does this mean? Commentators suggest it is "what?you?could?have?got?for?it?in?money? if?you?had?sold?it," in other words, the cash price at which a trade would (or could) occur. A trade between whom? The Regulations indicate a trade between a willing buyer and seller. In Estate of Bright v. United States, the Fifth Circuit held that “willing buyer and seller” in the fair market analysis were hypothetical persons, unrelated to each other. The Regulations also indicate that neither party to this hypothetical transaction should be under a compulsion to buy or sell; the sale cannot be a forced sale. As Mr. Steinkamp indicates, a price in a forced sale is obviously not one for fair market value and should not be used to determine transfer taxes. “A sale under which one party or the other would be compelled would not be representative of fair market value, because if the buyer is compelled to buy, the price would be artificially high, and if the seller is compelled to sell, the price would be artificially low." Finally, regarding this hypothetical buyer and seller, the Internal Revenue Regulations state that each party must have reasonable knowledge of relevant facts. Only “reasonable knowledge” is required; neither equal nor complete knowledge is mandated. For example, clearly the seller will almost always have more complete and accurate information regarding the artwork than the buyer does. But, as for all markets, slight disparities in information do not defeat the concept of reasonable knowledge. It is assumed that if markets exist, they have assimilated all the available information (i.e., publicly traded stock exchanges). These organized markets will normally produce prices which an ownercould have received had he sold on the date on which price is determined. This is the concept of efficient market, so important to valuation in all contexts, and equally applicable in the art context. Because of the assumption of an efficient market, courts have rejected attempts to disregard quoted prices on the basis that relevant information had been concealed, and thus the market price did not reflect a "fair" value.
Both the Internal Revenue Code and Regulations refer to valuing property for estate tax purposes in the context of a “market.” What is this market? As discussed above, whatever it is, it is assumed to be efficient, that is, to have assimilated all available information. But the Regulations also refer to a “market in which such item is most commonly sold to the public.” The Regulations indicate where property is generally obtainable by the public in the retail market, “the fair market value of such an item of property is the price at which the item or a comparable item would be sold at retail.” However, the Regulations also indicate that for personal effects articles with a “marked artistic value” (e.g., jewelry, paintings, etchings, engravings, antiques, books, statuary, vases, certain collections) “the appraisal of an expert or experts, under oath, shall be filed with the return.” Thus, for the valuation of artwork, the inquiry set out by the Internal Revenue Service ranges from retail markets back to the subjective nature of appraisal. Case law does not provide much assistance, indicating that if the item is generally obtained by the public in the retail market, the fair market value of that item is the price at which it would be sold at retail, with “such uncertainty as ordinarily attaches to” such an inquiry. Mr. Steinkamp indicates that in the art context, retail market sales may sometimes be made by several methods, including public auctions, private sales, and galleries. Also, if property can be acquired by several methods, alternative markets might be involved. Mr. Steinkamp concludes that, generally, absent evidence to the contrary, the IRS will define “market” to include dispositions by private sales, gallery sales, or auctions on the assumption that a buyer would pay a comparable price in any one of these settings regardless of how the art was acquired. In short, however, it appears that determining what constitutes a market for the purposes of determining fair market value of artwork depends on the facts and circumstances of each case and may hinge on the nature and price of the item being valued.
Finally, there are at least two other factors to consider in forming the statutorily mandated “hypothetical sale in the marketplace.” First, transaction costs. Regardless of the market or parties involved, a hypothetical seller will not always receive what a hypothetical buyer pays in a sale because transactional costs reduce the amount received. In any market, it costs money to sell art. Second, there is the issue of events subsequent to the decedent's death. The ordinary rule is that such events not are not to be considered in fixing fair market value of decedent's property, except to extent that they were reasonably foreseeable at date of valuation, which in estate tax cases is date of death. However, as Mr. Steinkamp indicates, this is a rule of relevance. In other words, certain post-death events (e.g., a sale) might be relevant in determining the value of a particular item of property at death. Again, this appears to be a fairly fact specific inquiry.
In summary, then, the Internal Revenue Service has set up essentially a fact-based analysis for determining the value of a decedent’s property for estate tax purposes—a price that a hypothetical willing buyer and a willing seller would come to in an arms length transaction.
III. The Quedlinburg Art TreasuresA. The Story:
In April 1945, in the closing days of World War II, Joseph T. Meador’s army unit occupied the German town of Quedlinburg. Unfortunately for Quedlinburg, Meador’s unit was in charge of guarding a valuable collection of art objects that residents had placed in a mineshaft. These artifacts apparently had great historical, artistic, cultural and religious significance. Somehow, Meador obtained access to the mineshaft and stole most (or perhaps all) of the artifacts. Then, he mailed them, addressed to himself, to his home address in Whitewright, Texas, a small town “with only one stop light.” His mother collaborated with him by receiving the shipments of artifacts. As the Technical Advice Memorandum indicates, Meador’s “mother no doubt fully appreciated the value of the art objects, because, among other things, she had studied art” and taught it in college.
Within several months after the thefts, Quedlinburg officials discovered the loss. However, by that time, despite the cooperation of the American authorities, it was unlikely the objects could be recovered because of the number of units stationed in and around the area. Meanwhile, Meador had continued his nefarious ways while assigned to teach art to military personnel at a university in France. This time, his thefts were discovered before his unit moved on, and Meador was court-martialed and sent back to the United States.After returning to the United States, Meador taught art and architecture until 1957, when he returned to Whitewright. He moved back in with his mother and leased an apartment in a nearby town, which he furnished lavishly and maintained until his death. Apparently, throughout this time, Meador’s brother and sister also knew of the art objects. Both had seen at least some of the art in his possession on numerous occasions. In 1978, Meador gave his niece a piece of the treasure as a gift. Apparently, Meador also sold some of the art. Beginning in the late 1950’s Meador built three greenhouses in Whitewright, filling them with rare and expense plants (totaling 6,000 in all, some of which were worth $400 each) and parakeets, which he maintained until his death. According to the TAM, the aggregate value of all of this was more than $2.4 million. In the last 3 years of his life, 1977, 78, and 79 he reported $15,150, $16,350, and no taxable income, respectively.
By 1980, when Meador died, it appeared virtually impossible for Quedlinburg to ever find the art objects because of the time that had elapsed and number of people involved. In his will, he bequeathed all of his silver, china, and crystal (apparently not part of the Quedlinburg treasure) to his nieces and nephews. He left all the rest and residue of his estate to his sister and brother. His will also contained an odd provision that the only action to be taken in the probate court in relation to his estate was to be the recording and probating of the will and the filing of the return of inventory with a list of claims. Apparently, Texas law allows this. Under this testamentary scheme, Meador’s property was distributed between his brother and sister in an ad hoc fashion. Seven months after his death, Meador’s sister, as executrix, filed (under oath) an inventory of his estate, totaling $81,225, and making no mention of any art. Texas also released the estate from having to pay any state inheritance taxes due its “relatively small size.”In the mid-1980’s, Meador’s brother and sister began taking the art objects to appraisers. When asked how they had obtained them, they responded that they had inherited them. Also, in the mid-1980’s, Meador’s brother used some of the treasure as collateral for a loan. In 1986, one of Meador’s nephews took a manuscript to be appraised. The appraiser told him he was fairly certain it was stolen. When the nephew took the manuscript to a director of a medieval research organization, he was again told that it was stolen, but the director nevertheless offered to purchase all of the manuscripts in the collection for $1 million. The TAM provides other accounts of how Meador’s family, in the mid-1980’s, contacted various collectors and dealers from around the world and received offers ranging from 3 to 9 million dollars. As a result of these attempts to sell the treasure, in 1990, a detective hired by Quedlinburg traced the art to Texas. Quedlinburg then commenced legal action to retrieve its property.
As William J. Turnier indicates, in 1990, the entire treasure was estimated to be worth between $50 million and $100 million in the legitimate art market. The Quedlinburg church and a German cultural foundation eventually agreed to pay Meador’s heirs a $2.75 million finders fee.B. I.R.S. treatment
The IRS issued a Technical Advice Memorandum to deal with, among other things, the issue of the valuation of these art treasures for estate tax purposes. The representative of Meador’s estate argued that the only applicable “market” for these items is the illicit market in which stolen art objects are regularly sold. Because there is no legitimate market for these items, he argued, the estate tax value must be zero. The I.R.S. disagreed. First, quoting Publicker v. Commissioner, the I.R.S. held that “the fact that a piece of property is unique does not...establish that there is no market for the property. The statute and the regulations cannot be limited to apply only to fungible goods.” From this, the I.R.S. extrapolated that just because a market is illicit does not obviate the existence of that market for estate valuation purposes. To support this view, the Service cited other cases using illicit markets as the applicable market for estate tax valuation. From these cases, the I.R.S. concluded that the fair market value of property that can only be transferred illegally is the price that a willing buyer would pay in the relevant illicit market, and the relevant illicit market is determined by the particular illicit market in which such property is generally sold.
Applying the law to the Meador facts, however, the I.R.S. concluded that art is different than other illegally obtained property in that the legitimate, as well as illegitimate markets are relevant to a determination of value. As the Service indicated, because Meador and his family was able to dispose of some of the artwork to dealers, both legitimate and illegitimate, some of whom knew the artwork was stolen, the fair market value, on the date of Meador’s death, is the highest price that would have been paid whether in the discreet retail markets of the international network of traffickers in stolen art or in the legitimate retail market. To further support this position, the IRS assigned a 10-year-term-for-years interest to the artwork (because Meador’s brother and sister had undisturbed possession for 10 years after his death). Using the valuation tables from Section 20.2031-10 of IRS regulations (as amended in 1984), the Service found that the present value of the right to use $1.00 for 10 years, beginning in 1980, is .558395. Thus, the IRS argued, when the decedent died, he passed an interest to his siblings equivalent to at least 55% of the 1980 value of the artwork.Finally, the IRS examined the issue of whether any deduction was allowable under section 2053(a)(3) of the IRS Code for the stolen property claims filed against the estate heirs in 1990. The Service did not allow a deduction for several reasons. First, under Texas law, a claim is not enforceable against an estate if it is asserted one year after the appointment of an executor and/or the assets have been distributed to the heirs and legatees. The claims here were not asserted against the estate until 1990, some 10 years after Meador’s death. Section 2053(a)(3) of the Code provides only for deductions for claims against an estate allowable by the laws of the jurisdiction where the estate is administered. Thus, as these claims are not allowable under Texas law, the IRS reasoning goes, they can not be claims for the purposes of the Section 2053(a)(3) deduction. Also, the Service held, in the case of a potential or contingent claim against an estate, case law indicates that the claim must become certain and be asserted before the end of a reasonable period of administration. In sum, the Service concludes that if a claim is asserted, as here, long after a reasonable period of administration has ended, and the estate property is, in fact, distributed to the decedent’s heirs, such a claim when presented, is not allowable as a deduction from the value of the gross estate under § 2053(a)(3).
C. Criticisms of the IRS approach in TAM 91-52-005
First, I do agree with the Service’s conclusion that both the legitimate and illegitimate markets are relevant here. It is apparent, from the authorities cited by the I.R.S. regarding stolen art, that the market “in which such item is most commonly sold to the public” in this case could be either or both the legitimate and illegitimate markets. In fact, in the instant case, Meador’s family had contacted buyers in the legitimate market who knew the treasures were stolen, but who were still interested in them. Thus, it is apparent that a sale could have been made in either the legitimate or illegitimate markets.
However, following the statutory model I outlined above, after selecting the market for this hypothetical transaction, one must also look at the hypothetical “willing buyer and seller.” As William Turnier points outs, it is unclear in TAM 91-52-005 whether the Service is referring to the value realizable by the “true owner” of the property or that of a thief. This is important, because latter facts indicate that the most Meador’s heirs could ever hope to receive for the art was between 2.75 million and 3 million dollars in the illicit market or reward market. Mr. Turnier would limit the market used only to the illicit market, as a kind of “discounted fair market value analysis,” tantamount to a situation where a possessor holds property under a clouded title. I disagree with Mr. Turnier. The statute specifically says that the value is to be determined at the time of the decedent’s death, and, as stated above, the ordinary rule is that post-death events are not to be considered in fixing fair market value. I do not think that what happened in 1990, that is, the detective tracing the art to Meador’s family, is either relevant to what the property was worth in 1980, when Meador died, nor foreseeable when he died. After all, Meador retained this property for 35 years, undiscovered. Apparently, he sold some of it during his life, because he was able to maintain a lavish lifestyle, much better than his reported taxable income would indicate. Thus, I conclude that no special discount should be applied based on whether, after Meador died, his family had the interest of a “true owner” or a thief. The family were willing sellers, and there were certainly willing buyers. I think that is all that is contemplated by the statute.
The next issue presented by the I.R.S. “hypothetical sale” model for the valuation of property for estate tax purposes is whether, as required by the Regulations, the parties in the sale of this artwork would have “reasonable knowledge of relevant facts.” As indicated above, efficient applicable markets are implicit in this requirement. I do not believe that in art generally, and certainly in the case of these art treasures, one could say that there is an available efficient market. As Jeffery C. McCarthy writes, the factors that lend value to a work of art tend to change, rendering the art market artificial and subject to great manipulation. “In perhaps no business can a $500 item be transformed into a $5,000 item for some purposes and a $50 item for others—an ‘incestuous world’ where large sums of money change hands secretly and frequently, and where the price manipulation is not only expected but mildly condoned.” Also, as indicated by the Tax Court itself in Estate of O’Keefe v. Commissioner, “[b]y 1986, it had become apparent to knowledgeable dealers and collectors that the art market...had grown so fast it was becoming unstable and unreliable.” When one adds the further uncertainty caused by the fact that the art in the instant case was stolen, I do not see how one could call any available market in this case efficient. While I will not attempt to present a global solution to this problem in valuing art for estate taxation purposes generally, I do think that the I.R.S. should have recognized this in drafting TAM 91-52-005.Finally, I think the I.R.S. was wrong in TAM 91-52-005 to present the “Term-of-Years” valuation. This valuation assumes that the right to hold art undisturbed is the same as the right to hold the equivalent value of dollars. While I agree with the axiom that a dollar today is worth more than a dollar tomorrow, I do not see how it is applicable to art. As Mr. Turnier puts it, all that Meador gave his family was the right to enjoy the artwork. Using the IRS formulation, then, they in essence received 55.8395% of the right to enjoy the collected manuscripts, reliquaries, coins, and the like. There is no evidence of the value of the right to enjoy only, exclusive of the right to sell; presumably, the right to enjoyment is itself only a fraction of the art’s market value. I have a further criticism of this method. Art has traditionally been viewed by collectors as a solid hedge against inflation and deterioration of currencies. It does not suffer from the infirmities of the time-value of money. At least, its present and future value should not be measured the same way as money’s is. Thus, even assuming the validity of the I.R.S.’ premise that Meador transferred a 10-year-for-term-for-years interest in the stolen items to his siblings, it is not valid to use any discount rate based on the present value of cash payments. Therefore, I do not believe that the Service’s use of a discounted term of years approach is at all helpful in determining the value of the stolen art treasures.
Suffice it to say, I do not think that the I.R.S. valuation of the Quedlinburg treasures is fatally flawed; however, I do think it is incomplete. I think the Service failed to consider the volatility and general unreliability of art markets, especially the market for stolen art. I also feel that trying to value the art in terms of the interest passed to Meador’s heirs for 10 years is unhelpful and inaccurate. While I profess to be neither an expert in art nor valuation, I think a more helpful approach would be to actually use the Treasury Regulations. As discussed supra Section 20.2031-6 provides for appraisal of “valuable articles.” Presumably, an appraiser would be able to look at this art and consider all of the relevant factors, including market volatility, to come up with the appropriate value. Furthermore, an appraisal could be done independent of what eventually happened to the art; that is, the claims made against it by Quedlinburg. In the end, like most valuations, I think this kind of fact specific, equitable inquiry is necessary to insure that the estate of Joe Meador pays taxes on all that art just like you and I would have to. Simply put, this is another situation where valuation is a matter of judgment rather than mathematics.
 Stephen E. Weil, Art and the Law, Law Library Journal, Vol. 70, p. 1., quoted in Norman E. Donoghue, II, Art Appraisals and Valuation for Federal Tax Purposes: Mechanics of New IRS Appraisal Rules, 297 PLI/Pat 183 (1990).
 John G. Steinkamp, Fair Market Value, Blockage, and the Valuation of Art, 71 Denv. U. L. Rev. 335, 338 (1987).
 Steinkamp, supra note 3 at 397.
 Steinkamp, supra note 3.
 Id. For an excellent discussion on the roles (and importance) of appraisals in the valuation of art work for estate tax purposes, see Jessica L. Furey, Painting a Dark Picture: The Need for Reform of IRS Practices and Procedures Relating to Fine Art Appraisals, 9 Cardozo Arts & Ent. L. J. 177 (1990); Jeffery C. McCarthy, Federal Income Taxation of Fine Art, 2 Cardozo Arts & Ent. L. J. 1, 18-25 (1983). As will become apparent throughout this paper, the role of appraisers and appraisals of artwork is extremely important to its valuation for estate tax purposes. However, a detailed exploration of this topic is beyond the scope of this paper, so it will not be discussed here.
 Steinkamp, Supra Note 3, citing Furstenberg v. United States, 78-1 U.S. Tax Cas. (CCH) 83,545, 83, 548 (Ct. Cl. 1978) (noting that three experts with impressive qualifications valued “La Meditation” by Corot at $40,000, $90,000, and $250,000. See also, Donoghue, supra Note 2, discussing attempts the IRS has made to regulate the appraisal of art.
 26 U.S.C. § 2031 (1998) (emphasis added).
 See 26 U.S.C. §§ 2031-2044.
 26 C.F.R. § 20.2031-2(b). Note: the “alternate valuation” method referred to here is set out in § 2032 of the Internal Revenue Code, where the executor of a decedent’s estate can elect to have the property valued at another time than “at the time of” decedent’s death. As this section requires election, and, in the case of fruits of crime most executors would not want to acknowledge the existence of the property, I will not dwell on this section here. However, it could be yet another factor in the ultimate valuation of stolen artworks under the right circumstances, however unlikely it might appear that those circumstances would ever arise.
 26 C.F.R. § 20.31-1(b)
 Steinkamp, supra note 3 at 344.
 Estate of Bright v. United States, 658 F.2d 999, 1006 (5th Cir. 1981). The 9th Cir. and Tax Court also follow this approach. See Steinkamp, supra note 3 at 347, citing Propstra v. United States, 680 F.2d 1248 (9th Cir. 1982), Estate of Andrews v. Commissioner, 79 T.C. 938 (1982).
 Steinkamp, supra note 3 at 350, citing Korn v. Commissioner, 35 B.T.A. 1071, 1079 (1937), I.R.S. Valuation Guide for Income, Estate and Gift Taxes at 9.
 Steinkamp, supra note 3 at 350, citing Valuation Guide for Income, Estate and Gift Taxes at 9.
 26 C.F.R. § 20.2031-1(b)
 Steinkamp, supra note 3 at 351.
 Id. at 351-352.
 Id. See also Andrews v. Commissioner, 135 F2d 314, 318 (2d Cir.), cert. denied, 320 U.S. 748 (1943) (The ability to have sold the property in the market justifies the use of market prices even if the market was “rigged”).
 26 C.F.R. § 20.2031-1(b)
 Id. The Regulations provide the example of an automobile; the fair market value of an automobile is the price for which one of the same or approximately same description (i.e., make, model, age, condition, etc.) could be purchased by a member of the general public, not the price for which it would be purchased by a dealer.
 26 C.F.R. § 20.2031-6
 Estate of Scull v. Commissioner (1994), 1994 WL 179764 (U.S. Tax Ct.), 67 T.C.M. (CCH) 2953 (1994)
 Vardell's Estate v. C.I.R., C.A.5 1962, 307 F.2d 688
 Steinkamp, supra note 3 at 358-359.
 Id. at 359. See also Biagiotti, 1986 T.C.M. (P?H) at 2121. The court held auction sales of pre?Columbian art did not reflect sales in the retail market because such sales were composed of wholesale and retail transactions.
 Steinkamp, supra note 3 at 399.
 See Jeffery C. McCarthy, Federal Income Taxation of Fine Art, 2 Cardozo Arts & Ent. L.J. 1, 12 (1983). Mr. McCarthy cites Turner v. Commissioner, 23 T.C. Mem. (P-H) 54,142 (1954) and McCoy v. Commissioner, 38 T.C. 341 (1962) for the proposition that a Tax Court can refuse to determine value solely by referring to the retail cost of the property received and instead at an equitable valuation through the examination of the facts in each case.
 Steinkamp, supra note 3 at 359.
 First Nat. Bank of Kenosha v. U.S., C.A.7 (Wis.) 1985, 763 F.2d 891
 Steinkamp, supra note 3 at 353.
 This review of the facts is taken primarily from the TAM 91-52-005, WL 779966 (I.R.S.) (1991). But, because the TAM redacted the decedent’s name, decedent’s family members’ names, and the name of the town from which the art was stolen, I have also taken some of the information from Turnier, supra note 1.
 Turnier, supra note 1 at 166.
 Id. at 167.
 TAM 91-52-005, WL 779966 (I.R.S.) (1991). Note: Technical Advice Memoranda are not to be used or cited as memorandum, but given to taxpayers to explain a decision in an individual tax dispute. Also, please note that page references are not available for this publication on Westlaw. Hereinafter TAM 91-52-005.
 TAM 91-52-005 also deals with includibility of theses art objects in Meador’s estate, including an analysis of applicable state and federal law. For the purposes of this paper, I will assume that the IRS correctly decided this issue, so I will not dwell on it here.
 TAM 91-52-005
 Id, quoting Publicker v. Commissioner, 206 F.2d 250 (3d Cir. 1953).
 TAM 91-52-005
 Id. See, e.g., Jones v. Commissioner, T.C. Memo. 1991-28 (“street market” of illicit drugs was the relevant market for 42 kilos. of cocaine), Caffery v. Commissioner, T.C. Memo. 1990-498 (fair market value of “low quality” marijuana based on the “retail street market”), Browning v. Commissioner, T.C. Memo. 1991-93, (fair market value of marijuana based on the “wholesale street market”).
 TAM 91-52-005.
47] Id. See also Pranay Gupte, Art-work Thefts Seen Pointing to Cross-Country Gangs, N.Y. Times, Jan. 8, 1979, at A14; Andrew L. Yarrow, A lucrative Crime Grows Into a Costly Epidemic, N.Y. Times, March 20, 1990, at C-20 for a discussion of the prevalence of art thefts and the ease at which thieves are able to dispose of stolen art on the legitimate and illegitimate international markets.
48] TAM 91-52-005
 Id. Section 2053(a)(3) provides that for purposes of estate tax, the value of the taxable estate shall be determined by deducting from the value of the gross estate such amounts for claims against the estate as allowable by the laws of the jurisdiction where the estate is being administered, subject to certain enumerated limitations.
 TAM 91-52-005
 TAM 91-52-005. See Estate of Theis v. Commissioner, 81 T.C. 741 (1983).
 TAM 91-52-005
 Turnier, Supra, note 1 at 183.
 Supra, text accompanying note 36.
 See supra, text accompanying note 20.
 McCarthy, Supra, note 34 at 8 (1983)
 Estate of O’Keefe v. Commissioner, 1992 WL 69970 (U.S. Tax Ct.), 63 T.C.M. (CCH) 2699, T.C.M. (RIA) 92-210 (1992).
 See supra text accompanying notes 49-50.
 Turnier, Supra, note 1 at 185.
 Pranay Gupte, Art-work Thefts Seen Pointing to Cross-Country Gangs, N.Y. Times, Jan. 8, 1979, at A14
 Supra, text accompanying note 28.
 Hamm v. Commissioner, 325 F.2d 934, 940 (1963)