WYWH: Immigration Law and the Arts – NICE WORK IF YOU CAN GET IN


By Katherine Jennings


Screen Shot 2017-04-28 at 11.41.59 AM

Photo credit: Center for Art Law.

On March 9, 2017, the Center for Art Law held an Art Law Mixer addressing the timely and provocative topic of immigration issues confronted by immigrant artists with the recent issuance of EO 13769, among other anti-immigrant measures. The 45th President commenced his presidency with a barrage of Executive Orders (EOs) including EO 13769*, which was signed by Trump on January 27, 2017, and restricted travel to the U.S. from seven Muslim-majority countries and by all refugees. This EO has had far-reaching and devastating effects on immigrants including immigrant artists. It has wreaked havoc and confusion at the borders. Antagonizing foreign dignitaries, it has quickly been met with outrage and resistance by artist activists, art organizations, and lawyers.


The Georges Bergès Gallery, a stylish, SoHo gallery with an international focus, was the apt and welcoming site of the two-hour event, a first Center for Art Law (the “Center”) program to address immigration issues. It was composed of a wine and cheese reception and presentation by the founders of Lehach Filippa, an immigration law firm intended to serve creative professionals, followed by a Q&A. The discussion was moderated by Irina Tarsis, founder of the Center. Attendees included lawyers, artists and law students. After a brief warm up period during which attendees were encouraged “to talk to someone you didn’t come with,” Georges Bergès, the founder of the eponymous contemporary art gallery, spoke briefly to welcome all and to talk about the global perspective of his gallery. Bergès said his goal is to find authentic artists who are working in their own cultural context.

On to the substantive portion of the evening, Tarsis introduced Alejandro Filippa, Esq. and Michael Lehach, Esq, founding partners of Lehach Filippa. Lehach and Filippa spoke about the O-1 visa, commonly referred to as the “artist visa”, and the process of applying for work permits as a foreign artist. The current political climate and the effects of the anti-immigrant executive orders from President Donald Trump was also a topic of discussion. Filippa speculated that if the current precedent of an excessive number of executive orders is any indication, we will likely see more pushback and restrictions to immigration applications and processes in the future.

In order to qualify for an O-1 visa, or artist visa, an applicant must demonstrate “extraordinary ability by sustained national or international acclaim and must be coming temporarily to the United States to continue to work in the area of extraordinary ability.” Extraordinary ability in the field of arts means “distinction.” The Immigration Act of 1990 (Pub.L. 101-649, 104 Stat. 4978) was a national reform of immigration that, among other things, excluded artists and entertainers (as well as athletes and nurses) from qualifying for H-1B visas. Two new categories, O and P, were introduced for extraordinarily skilled foreigners in the arts and sciences. The 1990 legislation was created in response to the Immigration and Nationality Act of 1952 (Pub.L.), aka the McCarran-Walter Act, which was meant “to exclude certain immigrants from immigrating to America, post-World War II and in the early Cold War.

Clearly, both Lehach and Filippa enjoy their law practice and are competent, dedicated professionals. Their passion was evident as they spoke about the process of creating a solid application in order to achieve success in obtaining an artist visa. Advocating for their clients is predicated upon a solid application with supporting documentation. Involved in facilitating artist visas and residence applications, they represent foreign creative professionals who want to work in the US and creative organizations seeking foreign talent to work in their US office. Their clients are from diverse industries such as the performing arts, music, fashion, film, photography, design, fine art, journalism and more. These “extraordinary aliens” have included tattoo artists, dancers, and rappers. The client may seek Temporary Work Visas and /or Permanent Residence based on Extraordinary Ability.

Lehach and Filippa outlined the proof needed to establish a valid application for an artist visa. In addition to a detailed resume, the client should include all relevant documents regarding their awards, notable clients, publications and press, and work history. An applicant must provide at least eight references by professionals who can attest to the extraordinary abilities of the applicant. Noting that an applicant’s file can be huge, they also spoke about how they have to be from important and respected sources. Lehach noted that it would not do a client any good if he were to provide his private residence as a gallery that would show the applicant artist’s work. Rather, the gallery must be a well-known and established entity.

Another crucial component of the application is an itinerary of the events and activities in the beneficiary’s field of extraordinary ability. You must have a plan of what you will be doing, with whom and when, and it has to be concrete. This constitutes the Sponsorship aspect of the application. For example, the applicant must provide an established list of galleries who will show his or her work and a concomitant timeline. An Employer, an Agency, or an Agent is an acceptable sponsor. Finally, it is helpful for the applicant to have a portfolio as a physical manifestation of the accomplishments detailed in his or her resume.

Lehach and Filippa also spoke about the case of an application for an Artist Visa being rejected. They said it is much better to refile, than appeal, because the immigration agents can be fickle. Noting that it can often be difficult to decide what constitutes extraordinary ability, they said it is crucial to initially establish a solid case. Their law firm also deals with other immigration issues such as obtaining permanent residency, obtaining a green card, and asylum issues, and extension of artist visas.

The presentation was followed by a lively question and answer session. Both presenters showed obvious delight in their chosen field and were quick to address each question thoughtfully. One interesting tidbit revealed during the Q&A was that under the right circumstances there is even a provision for bringing an artist’s muse into the country on a visa. As for the immigration ban that instigated the theme of the evening, “a judge sitting on an Island in the Pacific” ruled it unenforceable.

*Note that on February 3, 2017, EO 13769 was given a temporary restraining order in a decision from the Ninth Circuit of the Court of Appeals. EO 13769 was revoked as of 3/16/17.

About the Author: Katherine Jennings is a lawyer and contemporary realist oil painter living in New Jersey. She has a B.A. in History from Duke University and a J.D. from Fordham University School of Law where she was an Associate Editor of the Fordham International Law Journal. Having practiced intellectual property and immigration law, she is also certified as an Art Law Mediator with VLA. She was recently accepted into the Copyist Program at the Metropolitan Museum of Art and her work may be viewed at www.katherinejenningsfineart.com.


HEAR and the Guelph Treasure Recovery Efforts: Restitution in Review

By Nina Mesfin*

On June 7, 2016, the Senate Judiciary Committee heard a bipartisan-backed piece of legislation called the Holocaust Expropriated Art Recovery (HEAR) Act, S. 2763, 114th Cong. (2016). As recently reported by Center for Art Law and elsewhere, the HEAR Act aims to allow “civil claims or causes of action to recover artwork or other cultural property unlawfully lost because of the persecution during the Nazi era, or for damages for the taking or detaining of such artwork or cultural property.” In other words, the HEAR Act proposes a federal statute of limitations on restitution claims as opposed to statutes of limitation that vary by state in order to “lift unfair restrictions from heirs’ claims.” In addition to garnering support from both the Republican and Democratic parties, the HEAR Act also offers advocates outside of the political realm.

Screen Shot 2016-08-09 at 11.21.25 AMFollowing the bill’s introduction, on June 7th actress Helen Mirren testified before the Senate on behalf of the bill. Mirren’s support, in part, stems from her recent portrayal of Maria Altmann in the film Woman in Gold (released in 2015). Altmann was a Jewish woman who successfully reclaimed five Nazi-looted works by Gustav Klimt from the Austrian government in the landmark case Republic of Austria v. Altmann (03-13) 541 U.S. 677 (2004) 327 F.3d 1246, affirmed. The Altmann case set a legal precedent in which the Foreign Sovereign Immunities Act (FSIA) was applied retroactively, allowing a sovereign body to be tried in a U.S. court.

The timing of Woman in Gold, which has drawn public attention to Altmann’s success, coupled with recent congressional efforts to facilitate the restitution of Nazi-looted works, may impact the outcome of other restitution claims. One of these cases involves the Welfenschatz or Guelph Treasure– a collection of medieval art currently in the Kunstgewerbe Museum in Berlin—with an estimated value of $250 million dollars. On February 23, 2015, the heirs of the art dealers who sold the Guelph Treasure to Germany filed a civil action in a U.S. district court against Germany and the Prussian Cultural Heritage Foundation. The case of the Guelph Treasure will test further the limits of both the U.S. government’s dedication to Holocaust-era restitution claims and ability to broker restitution deals.

What is the Guelph Treasure?

The Guelph Treasure, consisting of 82 gold, silver and gem encrusted liturgical objects from the Church of St. Blaine in Brunswick, Germany, and according to art historian Christina Nielsen, it is considered to be “the greatest group of medieval objects ever offered for sale.” The objects range in date from the 8th to the 15th century and the majority are works of German craftsmanship while other notable pieces are Italian and Byzantine in origin. One of the most extraordinary characteristics of this collection is its indisputable authenticity; records indicate that prior to its auction, the Treasure has been in continuous care of the same noble German family for more than 800 years.

Subsequent Sales of the Treasure

Duke Ernst August was the last of his German ancestors to possess the Guelph Treasure. Due to economic hardship in 1928, the Duke was forced to put a price on what was considered a collection of “incalculable intrinsic value” because of “its antiquity and art-historical importance”(Nielsen, 442). To the dismay of many German citizens and the State itself, the Duke sold the Treasure to a consortium of Jewish art dealers in 1930: Julius F. Goldschmidt of Frankfurt, Berlin, and New York and Z.M. Hackenbroch and J. Rosenbaum of Frankfurt. Although the Duke intended for the collection to stay together, the consortium of art dealers, having failed to resell the collection in its entirety, began to sell off pieces of the Treasure.

After meticulously cataloging the collection, the dealers began selling, or rather attempting to sell, portions of the Guelph Treasure in Germany. As Germany frowned upon the sale of what it considered to be cultural patrimony, the new owners, a consortium of Jewish art dealers, then tried to sell the collection in the United States. The Guelph Treasure was first exhibited in New York in 1929, and by 1934, the consortium sold 40 of the Treasure’s 82 pieces to several museums in the United States, including the Cleveland Museum of Art (Nielsen 443). In 1935, the remaining 42 pieces of the Treasure were sold to the State of Prussia for 4.25 million Reich marks, or $1.7 million. High-ranking Nazi official Hermann Göring oversaw the acquisition and later gifted it to Adolf Hitler. It is the legality of the second sale in 1935 that the heirs of the consortium are disputing.

Appearing before the German Advisory CommissionScreen Shot 2016-08-09 at 11.27.45 AM

Before their U.S.-based lawsuit, the heirs of art dealers J. and S. Goldschmidt, I. Rosenbaum and Z.M. Hackenbroch appeared before the German Government Advisory, also called the Limbach Commission. The Commission is a joint initiative of the Federal Commissioner for Cultural and Media Affairs and the Länder and the National Association of Local Authorities; it invites claims concerning Nazi-looted property that public institutions in Germany currently possess. The Commission serves as a mediator between these public institutions and former owners as well as their heirs, hearing cases and offering resolution recommendations. The New York Times reported that the heirs’ lawyers cited the “climate of fear and uncertainty for the [dealers’] futures in which Jews in Germany found themselves in 1935,” arguing that these dire circumstances suggest that any “purchase by the state from Jewish businessmen must be considered as having taken place under duress.” The lawyers representing the heirs attempted to prove that the sale was, in fact, forced by explaining that the dealers sold the pieces for $4.3 million less than they had paid for it five years earlier. The panel attributed the ten percent market price decease to the economic downtown wrought by the Great Depression.

After contemplating this argument, in March of 2014 the Commission’s panel recommended that the 42 “jewel-encrusted, intricately wrought silver and gold crucifixes, altars and other relics of the Guelph Treasure should remain in the possession of the state-run foundation.” Bloomberg News noted that the Commission went on to state that “[f]ar from selling under duress, the consortium had been attempting to unload the Guelph Treasure for years,” pointing to the correspondence among consortium members celebrating the sale.” The Commission also noted that the Guelph Treasure is an exception to the Washington Conference Principles on Nazi-Confiscated Art, which all German museums have agreed to uphold. The Principles are a set of guidelines that maintain that “any art object sold by Jews for less than its fair value during this period (Jan. 30, 1933, through 1945) is a candidate for restitution,” a period that includes the Guelph Treasure.”

This ruling, in favor of the Kunstgewerbe Museum is one of many made by the Commission that has been met with criticism. As art journalist Catherine Hickley reports, the Limbach Commission has recently “come under fire for a lack of transparency, the length of time it takes, failure to appoint a Jewish member and the low number of cases it has mediated.” The Commission has only mediated thirteen cases since its founding in 2003, whereas its Dutch counterpart has issued more than 140 since 2002.** In July of 2016, Germany’s culture minister, Monika Gütters, actually announced plans to reform the Limbach Commission.

The Civil Lawsuit over the Treasure

Screen Shot 2016-08-09 at 11.32.39 AMAlmost a year after the Commission made its non legally binding recommendation, the heirs to the Guelph Treasure, filed a civil lawsuit in U.S. District Court for the District of Columbia. Philipp et al. v. Federal Republic of Germany et al., 15-cv-00266 (D. D.C.). According to a Washington Jewish Week article, the seventy-one page complaint alleges that the consortium sold the 42 pieces to the State of Prussia “via a manipulated sham transaction spearheaded by Dresden Bank, which was acting on behalf and by order of the two most notorious Nazi leaders and war criminals,” Göring and Hitler. The complaint further notes that the heirs used the fact that the alleged forced sale was made for less than 35 percent of its actual value and that the payment “was then subjected to flight taxes that were demanded so the Jewish dealers could flee Germany,” as evidence backing their claim. One of the dealers, Hackenbrock,was able to leave Germany in 1935, although died shortly thereafter in London in 1937. Details concerning the other two dealers, Rosenbaum and Goldschmidt, are unknown.

In order to justify filing this suit in a U.S. court, attorneys for the claimants invoked the Foreign Sovereign Immunities Act, which “provides jurisdiction over foreign states that conduct business in the U.S. via exhibitions and other museum-related activity.” According to O’Donnell, one of the attorneys representing the claimants, FSIA’s applicability to this case is straightforward, as “Jewish victims of persecution like the Plaintiffs’ ancestors are victims of takings in property in violation of international law.” He further explains, “[a]s a result, and because the Defendants are engaged in commercial activity in the United States, this case presents precisely the category of claims over which § 1605(a)(3) of the FSIA, the expropriation exception, creates jurisdiction.”

In March 2016, Germany and the Prussian Heritage Cultural Foundation responded by filing an eighty-five page motion to dismiss the case, contesting the jurisdiction of the U.S. courts. Within the motion, the defendants contend “that the persecution and expropriation of property from its Jewish residents were a sufficiently internal affair so as not to be a violation of international law.” O’Donnell has described this motion as “revisionist” and “troubling.” Most recently, on May 11, 2016, claimants filed an opposition to the motion to dismiss. The latest filing in the case was in June a reply to opposition to motion re motion to Dismiss the Plaintiffs’ First Amended Complaint. Now we are waiting for the court to review the filings.


The pending case involving ownership of the Guelph Treasure has brought two interesting issues into focus. The first is whether the blanket application of forced sales to an entire time period, in this case the years immediately preceding and spanning WWII, is legitimate, not taking into account the market or the profession of the seller, i.e. an art dealer who is almost always in the process of making a deal. The Guelph Treasure also tests the authority of advisory commissions with no binding power, as rulings made by the Limbach Commission are unenforceable. On the other hand, there are several other European arbitrating bodies whose opinions are binding, such as the Austrian Restitution Binding Commission and the Dutch Advisory Committee on the Assessment of Restitution Applications for Items of Cultural Value and the Second World War. As Hickley points out in her article “German minister promises to reform Limbach Commission after mounting criticism,” unlike the Limbach Commission, the Austrian and Dutch advisory committees do not require both parties to agree in order to mediate disputes.

In challenging the Limbach Commission’s clout, the case of the Guelph Treasure may bring a foreign body into conflict with the crux of the U.S. court system. It will be interesting to see if and how the U.S. judicial system, in its dealings with the Guelph Treasure, will impact the authority enjoyed by European advisory board’s ruling on contested art. As Elazar Barkan explains in The Guilt of Nations: Restitution and Negotiating Historical Injustices, restitution as a means of acknowledging gross historical injustices is a relatively novel phenomenon. Nowadays, it “is a large part of the growing attention being paid to human rights.” The question becomes: in which instances is restitution warranted and in which does it potentially exploit society’s overeagerness to atone for past atrocities? Furthermore, at what point, if at all, is it appropriate for a third party state to hear these claims and issue rulings? While the United States at times offers a venue to bring restitution claims, the outcome and the cost of these claims is unpredictable.

Select Sources:

**There are currently five restitution commissions: United Kingdom, Austria, France, Germany, and the Netherlands. In 2007, the United States government considered establishing its own restitution advisory commission, to no avail.

About the Author: Nina Mesfin is a Summer 2016 legal intern at Center for Art Law. She is a rising junior at Yale University majoring in Ethnicity, Race and Migration and concentrating in Art, Literature and Narratives of Race and Ethnicity. Nina is also a scholar in the Yale Multidisciplinary Academic Program in Human Rights.

Disclaimer: This article is intended as general information, not legal advice, and is no substitute for seeking representation.

WYWH: Legal Primer for Artists: Leasing Commercial and Residential Space & Dealing with Tax Issues


Preoccupied with their work, artists often neglect reaching out to accountants and attorneys for advice on how best to brace themselves for possible issues they may encounter. Among an artist’s various legal considerations, contracts are perhaps the most important. Contracts can be forged for consignment agreements with galleries and auction houses or for the rental of commercial and personal leases. Although contracts are invaluable for artists, a litany of complications accompany the process of facilitating, signing and executing them.

On Thursday, June 9, 2016, New York Foundation for the Arts (NYFA), in cooperation with the New York State Bar Association’s Entertainment, Arts, and Sports Law Section (EASL) and EASL’s Committee on Fine Art, gathered a panel of attorneys to offer basic legal information to artists. Attendees also included attorneys and students. The two-hour information session featured three speakers, all of whom shared valuable insights into issues pertaining to leasing commercial space, the rights of artists as residential tenants, and income and sales tax issues. The discussion was moderated by the co-chairs of EASL’s Committee on Fine Arts: Carol Steinberg, Esq. and Judith Prowda, Esq.

The first panelist to present was Jill A. Ellman, Esq. She is currently an Associate at M. Ross Associates, LLC, a law firm that handles all aspects of complex commercial litigations as well as transactional matters. Ellman focused on commercial leasing and how artists can ensure that they are protected from predatory practices such as exorbitant rent hikes, unauthorized changes to the lease and liability.

The second panelist to speak was David Frazer, Esq., Of Counsel to Himmelstein, McConnell, Gribben, Donoghue & Joseph, LLP. Having dedicated much of his career to advocating the rights of tenants, Frazer offered important advice concerning how artists can obtain the best leases while also protecting themselves. Frazer took great care to stress that artists “should not cut corners,” as record keeping is crucial to protecting one’s own personal interests. If a landlord or tenant requests any modifications to the lease, artists are encouraged to have the alterations signed by the landlord in writing and corroborated by all affected parties. Creating a paper trail of alterations to consignment agreements or real estate transactions helps protect the artist/tenant from possible abuses and in the event of future litigation.

Patricia Pernes, Esq., a Tax Consultant in the Business Tax Services sector and Art & Finance Group of a Big Four accounting firm, echoed Frazer’s sentiments regarding an artist’s responsibility to exercise due diligence in all formal transactions. Pernes, however, shifted the conversation from leasing issues to tax deductions applicable to artistic labor and the pieces themselves. Throughout her presentation, Pernes emphasized the distinction between a business and hobby, with the former classification being adequate for the deduction of materials and work-related expenses and the latter not receiving such protection. The principle element is whether the work is created in furtherance of a profit-driven business, in which case tax deductions can be used to incentivize growth. As with contracts, good record keeping is important for tax deductions as well.

The formal discussion was followed by a lively questions and answers session where attendees were able to ask the attorneys about legal provisions specific to their craft. Questions ranged from deductions that can be claimed by musicians for research to leasing for art nonprofit organizations. Ellman, Pernes and Frazer took the time to delve into each question’s nuance, applying their expertise to a motley of hypothetical situations and concluding what was, indeed, a priceless evening.

Disclaimer: This article is for educational purposes only and is not meant to provide legal advice. Readers should not construe or rely on any comment or statement in this article as legal advice. Instead, readers should seek an attorney.

WYWH: Knoedler Trial Uncut (Week 2)

By Center for Art Law Team


Source: The New York Times (Feb. 8, 2016).

Another exciting and riveting week has passed in Courtroom 318, where District Judge Paul Gardephe is presiding over the trial in the case brought by Domenico and Eleanor De Sole against Ann Freedman, Knoedler Gallery, and 8-31 Holdings and others. Over a course of about 15 years, Knoedler sold almost 40 works brought to the Gallery by Glafira Rosales. She admitted following a grand jury investigation and an indictment that all of the works she handled were forgeries. The Gallery earned about $80 million on the transactions involving Rosales trove and transferred over $20 million of that amount to its parent company, 8-31 Holdings, before closing to the public in November 2011. Both Knoedler Gallery LLC and 8-31 Holdings Inc. are incorporated in Delaware and were operating out of 19 E 70th Street, a stone’s throw away from the Frick Museum and other art institutions of the City.

As some art attorneys like to say, judges want to give opinions in art related cases. So who is presiding over the first Knoedler trial?

Screen Shot 2016-02-09 at 4.24.21 PM

1. Meet the Judge:

Judge Gardephe is a graduate of Columbia Law School who was nominated to the Southern District of New York in 2008 by George W. Bush. He has handled a number of fraud cases and high profile cases but the Knoedler cases appears to be the first arts related case on Judge Gardephe’s docket. Throughout the Knoedler trial, Judge Gardephe has been thoughtful in his consideration of objections and evidence admittance as well as diligent in his management of the trial. During the jury selection, Judge Gardephe underscored the civic duty that the members of the jury are called upon to perform and was very reluctant to accept mundane reasons presented by the would-be jurors in hopes of getting out of service.

Judge Gardephe has been making rulings in the Knoedler case for months leading to the public trial. Thus in his decision from September 2015 De Sole v. Knoedler Gallery LLC, No. 12 CIV. 2313 PGG, 2015 U.S. Dist. LEXIS 134146 (S.D.N.Y. September 30, 2015), he denied a summary judgement motion in part because he found that the movement of funds from Knoedler Gallery to its parent holding company 8-31 Holdings may be deemed siphoning of resources and thus ruled that 8-31 Holdings must remain a party to the dispute – on October 9, 2015 Judge Gardephe issued another opinion De Sole v. Knoedler Gallery LLC, No. 12 CIV. 2313 PGG, 2015 U.S. Dist. LEXIS 138729 (S.D.N.Y. October 9, 2015), explaining the reason for denying summary judgment. Specifically, he found that a reasonable jury could find an “overall element of injustice or unfairness,” in observing corporate distinction between Knoedler Gallery LLC and 8-31 Holdings LLC, the parent company of the Knoedler and Hammer Galleries.

In the October 9, 2015 opinion, Judge Gardephe also noted that Freedman enjoyed a significant financial fallout from the sale of the Rosales  forgeries. Notably, between 1998 and 2007 Freedman profit sharing percentage increased three times to a total of 30% of the Knoedler Gallery’s operating income. In 2007,  Freedman was paid more than $1.3 million in 2007.

2. Questions to Answer:

Before the trial and certainly as various art experts, accountants and researchers have been testifying at trial, the questions mount: Did Ann Freedman and the Knoedler Gallery know that they were selling forgeries? Or were they fooled along with the rest of the art world? These are the questions that everyone who is watching the trial as it unfolds both in courtroom and on the pages of the the newspapers is asking, and the jury may have a chance to answer them in the coming weeks, unless the parties settle before the verdict. On Sunday, February 7, 2016, two weeks into the trial, Ann Freedman settled with the De Soles. The terms of this settlement have not been disclosed; however, Freedman was expected to testify on Tuesday, February 9, 2016.* (Note: Freedman did not testify on February 9th).

3. What happened during the second week in De Sole v. Knoedler et al.,:

Monday, February 1, brought the conclusion of testimony from Eleanor De Sole as well as testimony from Christopher Rothko. Mrs. De Sole testified that she accepted the provenance that Ann Freedman and Knoedler provided because Freedman was the representative of one of the oldest and most reputable galleries around and “that should have said it all.” Freedman provided the De Soles with a list of experts who had viewed the work. The list served as a clever marketing tool to imply that individuals including David Anfam, E.A. Carmean, Irving Sandler, and Christopher Rothko authenticated the work. Even though Mrs. De Sole was not personally familiar with any of these people (she stated that the only name she was familiar with was Christopher Rothko), she was impressed with the line up and trusted its representation.

Due to his lineage, a celebrity witness, Christopher Rothko was next on the stand. Christopher, the son of Mark Rothko testified that he never authenticates his father’s work, as this “requires specific expertise” that he does not believe he possesses. He viewed the De Soles’ work, as well as other Rosales works, and may have described them as “beautiful” or “pristine” but he did not authenticate them or give permission for his name to be on any lists used in connection with the work. On cross, Rothko admitted to giving countless presentations about his father’s works as well as writing articles and organizing exhibitions related to Rothko. The dichotomy in the art market created by the fear of giving a negative opinion about a work of art and being brought to court to answer for the opinion has discouraged not only individual scholars but also authentication foundations from giving categorical rulings about the attribution of art works (See a previous article about the disbanding of the Keith Haring Foundation art authentication committee).  Rothko admitted that he directed Freedman to consult an art conservator for expertise regarding technique, paints and other physical qualities of the works attributed to his father. Freedman consulted Dana Cranmer (who testified on January 29). A memorable quote from the day: “On the basis of … research, a strong case can be made for authenticity or lack of authenticity of any given work.”A picture of Christopher Rothko leaving the courthouse appeared in The New York Times the following day. The decision to publish a photograph of this witness was not based on his Rothko expertise but rather on him being a genuine Rothko.

The second Rothko expert, David Anfam, was feeling less at ease on the stand and at times would proclaim certain statements or practices as “outrageous.” He is the author of the 1998 Rothko Catalogue Raisonne entitled Mark Rothko: The Works on Canvas and he, too, emphatically indicated that he does not provide authenticity for sale purposes. According to Anfam, the mysterious collector who was the source of the paintings was based in Switzerland and Jewish, and had considerable links to Mexico. Incidentally, the pedigree of Mr. X (or Secret Santa, a.k.a son of the collector, who was the purported source of the Rosales paintings) was unclear and changed multiple times. He was described as a sole heir to his father’s collection, and  as one of two children––at one point, he supposedly had an estranged brother and at another he had a sister. Anfam had the honor of informing the jury about “art transparency” (photograph of a work of art) and “Park Avenue Armory” (an annual show in the NY armory until recently). At one point, Anfam admitted that Freedman did most of the talking but as to the substance of her statements he described them as “a lot of nothing.”

On Tuesday, February 2, Plaintiffs’ attorneys began by wrapping up David Anfam’s testimony, which focused on his opinions about the Rosales works and how his impressions evolved as he learned more and more about the collection Rosales brought to Knoedler Gallery. Anfam considers himself to be the foremost expert in abstract expressionism and has authenticated Rothkos in the past. He saw dozens of the Rosales works and did not raise doubts as to their authenticity. In 2008, he wrote to Knoedler that the works were “99.99% okay” and he just couldn’t “see how anyone but the artists could have produced such a cache.” However, in 2012, he told an FBI investigator that such a large collection “strains all credibility,” later saying that he possessed information in 2012 that he did not have in 2008, such as the number of the works, the IFAR investigation of Jack Levy’s Pollock, and the results of Jamie Martin’s forensic tests.  Anfam emphatically denied giving Freedman permission to use his name in connection with any sales. By the same token, he probably never specifically asked her not to use his name in connection with the business transactions either.

Next on the plaintiffs’ witness list was Dr. Stephen Polcari a retired art historian whose expertise lies in abstract expressionism of the 1930s, 40s, and 50s. He has written books, received multiple fellowships, and taught courses in modern art and abstract expressionism at multiple universities. His testimony centered around his time working as an “independent contractor” at Knoedler Gallery, where he would curate exhibitions and write essays about works he saw at Knoedler. He would evaluate the style and meaning behind these works. Polcari testified that he thought the works he was writing about were authentic, or else he would not have written about them. In terms of the provenance of the works, his information came from Freedman, and he found this convincing simply because the works were in the Knoedler Gallery. Notably, Polcari read an email from an upset Ann Freedman, who told him that she was “kicked out the door” of the Knoedler Gallery “without so much as a goodbye.”

A small amount of Dr. Polcari’s testimony concluded the morning of Wednesday, February 3, but the stars of the day were Frank Del Deo, Jack Flam, and Martha Parrish. Mr. Del Deo, an art dealer in New York, worked at Knoedler from 1999 until 2011, and was the President and Director from 2009 until 2011. While at Knoedler, he sold 100-200 works, none of them from the Rosales collection. He testified that the standard profit for the gallery was anywhere between 5 and 100 percent on works the gallery owned and 20 and 30 percent for works they did not own, but the profits were “considerably higher” for the Rosales collection. These profits would be over 100 percent on occasion. Mr. Del Deo’s testimony contained many references to attorney-client privilege, but he stated that he left the Gallery employment in 2011, before the gallery closed, after speaking with a lawyer and sought other employment.

Next witness, Dr. Jack Flam, is an art historian who concentrates on Motherwell and Matisse. A close friend of Motherwell’s, he spent summers in his studio and serves as the President of the Dedalus Foundation. He has never authenticated a Rothko and was never asked to. He could not recall seeing the De Soles’ painting and was “very surprised” to learn that his name was included on the list that accompanied the De Soles’ work. Dr. Flam spoke rapidly about David Herbert and said that Freedman kept coming back to the Herbert story, but upon seeing a reproduction of a purported Motherwell in the Rosales collection, he believed it was a fake. When he looked four images of purported Motherwells and later saw one at Dana Cranmer’s studio he “strongly” believed they were fake, and expressed his opinion to Ann Freedman and Knoedler Gallery on several occasions, though E.A. Carmean disagreed with him.

Martha Parrish, a retired art dealer in New York and Palm Beach who helped draft the Art Dealers Association of America (“ADAA”) code of ethics, also testified on Wednesday. Ms. Parrish stated that dealers “run like hell” when an individual comes to them with a large collection of unknown works to sell below market price. She also informed the jury that cash is not a customary way to pay for a work on consignment (plaintiffs stressed that Rosales was paid in part by check, with cash below $10,000, and out of the country wire transfers). As to the usual range of profit on consigned works, Ms. Parrish testified that it ranges between 10% and 20%. In some instances, Knoedler’s profit was more than 700%. She stated that good provenance could be used as a selling tool and emphasized the importance of being transparent with prospective purchasers––presenting something as a fact that is not known to be fact is “not acceptable.” On cross examination and on its face, the practices actually followed by dealers may not be as transparent or stringent as this witness indicated through her testimony, which is the reason why the art market is notoriously opaque and all experts agree to that fact if little else.

Upon information and belief, Thursday, February 4, began with Victoria Sears Goldman, provenance researcher and an art historian, followed by a brief and uncomfortable testimony by Edye Weissler, a former Knoedler employee, taking the stand. Ms. Weissler performed research at Knoedler along with Melissa De Medeiros and E.A. Carmean. She attempted to establish a connection between David Herbert and the works that were coming into Knoedler from Glafira Rosales. Forensic analyst James Martin next took the stand. Mr. Martin does art examination work for FBI, US Attorney, Christie’s, Sotheby’s, and conservators, among others, in a private studio using the same methods and technology as museums. He has analyzed about 5000-8000 art works and taught courses on paint analysis. He was first hired by Knoedler in 2008 to evaluate 2 Motherwells, which he determined were not created in the 1950s, as they were purported to have been. Martin testified that he told Freedman and Knoedler to exercise caution when dealing with these paintings. He later examined the De Soles’ work and 15 other works sold through Knoedler. Martin concluded that all of the Rosales works were deliberate fakes. He described in great detail the process that he used to evaluate these works as well as the tools involved.

Martin’s testimony concluded on the morning of Friday, February 5, with more description about the process that he used to evaluate the De Soles’ work, a process that he said Knoedler’s competitors have been coming to him with artworks for since 2004. Forensic accountant Roger Seifert was the next person to be questioned. Mr. Seifert’s testimony concerned three topics: a profitability analysis of Knoedler from 1994 to 2011, the amount of profit sharing earned by Freedman from the Rosales sales, and whether or not 8-31 Holdings benefited from the Rosales sales. Mr. Seifert concluded that Knoedler would not have been profitable without the Rosales sales (the data showed that they would have lost about $3.2 million from 1994-2011), Freedman earned $10.4 million in profit sharing, and 8-31 Holdings benefited from these sales, as the income from Knoedler was included in their consolidated earnings. Between 1994 and 2008, works from Rosales were sold by Knoedler for about $70 million, bringing the gallery $32.7 million in net income.

The Knoedler demise and the subsequent lawsuits against it, its employees and shareholders highlight the power that experts wield in creating an aura of legitimacy. In the case of the Rosales forgeries, peppering correspondence with references to recognized authorities was enough, at least for a while, to compensate for an auspicious lack of documentation. The theme that emerged during the trial was that just because a work looks like a Pollock (Rothko, Motherwell, etc.), it is not necessarily a “Real McCoy.”

4. Food for thought:

Is there an ethical, if not legal, responsibility in the academic or art market community to ask probing questions regardless of context (reputable gallery or museum, renowned seller, collector, family member, curator)? At the end of the week, it seems that only cold, hard facts in accounting and science are able to light fire under the cool demeanor of the crème de la crème of the art world.

Disclaimer: Reading WYWH articles is no substitute to attending art law trials, programs and exhibitions in person. After all, picture is worth a thousand words, even if it’s a fake.

Select Sources and Suggested Readings:  

WYWH: Knoedler Trial Uncut (Week 1)

By Center for Art Law Team

Screen Shot 2016-02-01 at 9.53.51 AM.png

Dealer Stock Books: Knoedler & Co. Getty Research Institute.

After the “public closing” (words used by Melissa De Medeiros, a former Knoedler employee in her testimony on January 27) of the venerable Knoedler Gallery (the “Gallery”) in November 2011, rumors spread that the Gallery was implicated in selling forgeries of the top Abstract Expressionist masters – Mark Rothko (1903-1970), Jackson Pollock (1912-1956), Richard Diebenkorn (1922-1993), Clyfford Still (1904-1980), Willem de Kooning (1904-1997) and other important post-War American artists.

As the tale of how the Gallery accepted on consignment and purchased some of the fake artworks, signed and dated as if they were created in the late 1940s – late 1950s unfurled close to a dozen lawsuits alleging fraud and other causes of action were brought against the Gallery, its penultimate director and its owners. The art market and professionals in related fields prepared to witness a public trial and a look into the Knoedler dealings with its clients, advisors and colleagues. In 2012, the Getty Research Institute, which collects for preservation and study archives of art dealers and galleries, among other materials, acquired a pre-1971 portion of the Knoedler archive. The rest of the documents were retained by the parent company. The magical cut off date has nothing to do with the 1970 UNESCO Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property. Apparently, it was selected due to the fact that it was in 1971 that the Gallery, in existence for more than 100 years, was acquired by the legendary entrepreneur Armand Hammer (his grandson was the owner of the gallery in 2011).

By the end of 2015, less than a handful of the claims and complaints brought against Knoedler et al. were settled for undisclosed sums of money and under confidential terms.However, two cases De Sole v. Knoedler Gallery and Howard v. Freedman, et al., were scheduled for trial in January 2016. The latter case, involving a fake Willem de Kooning, was filed by collector John Howard in 2012 and settled on December 2, 2015.

On January 25, 2015, the trial in the case brought by Dominico and Eleanor De Sole began. The spectators following the De Sole trial as it has proceeded during the first week could witness first hand the jury selection process (which took about 5 hours), the heavy volumes of exhibits and testimonies prepared for both sides, the fake Rothko that seduced the De Soles in 2004, the demeanor of hostile and friendly witnesses, including the aforementioned Ms. De Medeiros, Dr. Thaw, Dana Cramer and Jim Kelly, Judge Gardephe’s style in instructing the jury, the legal teams and the mannerisms of the parties in the courtroom: Mr. and Mrs. De Sole (as the plaintiffs) and Ann Freedman (as the only defendant in attendance).

Summary of the Facts: The De Soles purchased a work attributed to Mark Rothko from Knoedler in 2004. It was their second Rothko acquisition, but their first Rothko painting on canvas, the other work in their collection was a Rothko on paper. During a visit to the Knoedler gallery, when the De Soles wished to see works by Shawn Scully, they were shown a different work attributed to Rothko which was presented by Knoedler through its employees as a recently rediscovered masterwork. While the De Soles initially only planned on spending one million dollars they ended up purchasing the alleged Rothko for a “discounted price” of $8.4 million. The De Soles ultimately purchased the work for $8.4 million with the assistance of their art advisors and another dealer James Kelly (who testified in the case on January 28).

Soon after the work was purchased, it was exhibited in Switzerland, and later shipped to the De Soles home in Hilton Head, South Carolina where it hung for seven years until 2011. Knoedler and Kelly both supplied the De Soles with a letter indicating that the work was authentic. As Kelly later explained in testimony, he was not in the habit of checking the provenance of the works sold by reputable dealers. Instead, his role in advising De Sole’s on the Knoedler purchase was to established the fair market value of the piece.

In 2008, the De Soles asked Knoedler to provide an updated appraisal for the work, which the Gallery promptly did. In 2009, Knoedler notified all of its clients, including the De Soles that Ann Freedman resigned and a new director was appointed to head the Gallery. In 2011, Mrs. De Sole learned of another collector’s concerns regarding a Pollock purchased from Knoedler by a hedge fund manager Pierre Lagrange. Lagrange’s lawsuit was settled on October 4, 2012. Within the statutory period of two (2) years after discovery of fraud, the De Soles brought their case. Among the allegations, the De Soles accused defendants of fraud, fraudulent concealment, wire and mail fraud, racketeering, aiding and abetting fraud, conspiracy to commit fraud, breach of warranty, and unilateral and mutual mistake. In their complaint, the De Soles sought a judgment of $25 million dollars which includes treble damages under the Racketeering Influenced and Corrupt Organizations Act (“RICO”).

The De Soles alleged each instance of fraud between 1994 through October of 2009 was not an isolated event but rather an interconnected scheme because there was a common goal, similar methods used, similar participants and similar victims. By doing so, the De Soles availed themselves of RICO causes of action and the statutory benefits that are associated with RICO such as treble damages and attorney’s fees. Specifically the De Soles alleged in their complaint that Knoedler was involved in a scheme to use its “name reputation, and access to collectors to sell forged works into the marketplace.” The complaint goes on to note that the works were being purchased for “suspiciously low” prices.

On January 23, a Friday afternoon before the trial was scheduled to begin, Judge Gardephe conducted a hearing in limine to review and rule on the admissibility of certain witnesses and types of evidence as potentially unduly prejudicial to the parties. Court’s rulings included.

Attorneys representing the Plaintiffs are partners with Clarick Gueron Reisbaum LLP. Knoedler’s legal team comes from Fulbright & Jaworski L.L.P. Ann Freedman’s council is with Boies, Schiller & Flexner, LLP.

Select highlights from Week 1 of the De Sole v. Knoedler, et al.

Day 1 — Jury selection and opening statement for the De Soles. The voir dire was an example of human spectacle where people from disparate walks of life were all gathered in the same place at random to perform their civic duty. They included parents with holiday reservations, medical employees, blue collar workers, high school teachers and college professors, students and retirees, people of different faiths and ranging interest in the matter at hand — rich people fighting over money and discussing abstract expressionism. Desire of those to get out of the jury duty would later be experienced by those with the transparent desire to be absolved of responsibility as demonstrated by some expert witnesses and parties to the case.

Day 2 — Opening Statements for Ann Freedman and Knoedler Gallery/8-31 Holdings. Both defendants’ opening statements emphasized the idea that the entire art world was tricked.  Freedman’s opening painted abstract expressionists as disorganized heavy drinkers, who were “messy, unpredictable,” and dysfunctional. The idea that Pollock traded some of his works for groceries was repeated on a number of occasions. Attorneys also emphasized the difficult burden for Plaintiffs to prove fraud, analogized to mountaineering. Knoedler’s attorney addressed the jury in a way that suggested that the trial was frivolous and that he would not waste the jury’s time any more than he had to.

Attorney for Freedman suggested that Knoedler and Freedman were victims of Glafira Rosales, just as much as the collectors who bought the forgeries and suggested that Rosales should be among the defendants in the case, and Freedman should not be held liable for Rosales’s crime.

Screen Shot 2016-02-02 at 1.13.41 AM.png

WSJ journal coverage by Thomas MacMillan and Elizabeth Williams. WSJ.com

Day 3 —  Witness testimonies from Jaime Andrade, Melissa De Medeiros, and Dominico De Sole. Much coverage in the news already characterized the at times entertaining and at times frustrated testimony and the cross examination of Mr. De Sole. See for example: The Art Newspaper coverage in Laura Gilbert’s “Top US collector takes the stand in Knoedler trial” (Jan. 28, 2016) and Artnet news coverage in Eileen Kinsella’s “Sparks Fly at Knoedler Trial as Defrauded Buyer of Fake Rothko Painting Takes Stand” (Jan. 27, 2016).

The testimonies given by Mr. Andrade and Ms. De Medeiros have received less attention so far. Unlike Mr. Andrade, a non-native English speaker who introduced Rosales to Freedman, Ms. De Medeiros spent a considerable time on the stand, carefully and almost begrudgingly responding to the questions posed by the Plaintiff’s attorney. The reticence was understandable, in light of the fact that Ms. De Medeiros has a long history working for the Gallery, where she held different research and exhibition positions between 1984 and 2014.

Day 4 — Witness testimonies from Eugene Victor Thaw, James Kelly, Sharon Flescher. Parade of witnesses for Plaintiffs continued with the testimony from Eugene Victor Thaw, author of the catalogue raisonné of Jackson Pollock; James Kelly, art dealer and advisor to the De Soles; and Dr. Sharon Flescher, the executive director and Editor in Chief at theInternational Foundation for Art Research (IFAR).

Among other questions posed, witness were asked to explain art history and art market terms such as  “catalogue raisonné”, ‘provenance,’ ‘connoisseurship,” “warranty of authenticity”, “secondary market,” as well as comment on the Knoedler’s reputation before the Rosales scandal. Most art historians and critics who took the stand emphatically and categorically indicated that they did not give opinions about authenticity because “it was not their job.” Even those who have spent much time reviewing body of works by Pollock and Rothko indicated that it was not their position to give opinions on authenticity.  

Some of the entertaining and memorable Q/A included:

Q: “You wrote this document?” A: “I typed it.”

Q: “You now understand this painting is a fake?: A: “No, I do not.”

Q: “You are a lawyer?” A. “No. I sell handbags for the last 25 years. Successfully I might add and [they are] real.”

A: “He knew he was wrong from my letter. [it was] implicit. I was not willing to publish it myself. … If you want my true testimony, by not publishing I gave a negative opinion.”

A: “CB … who “blessed it” !!!! (as if)…[JC] apparently saw it “Inspected it” and gave his ok (as if he would do so).

Q: “Do you typically describe 2 paintings as a ‘collection’?: A: I would not…”

A: [Having listened to a deposition being read to refresh recollection one witnesses stated that it “Sounds alright … does not say anything”. [Followed by laughter in the courtroom]

Day 5 — Witness testimonies from Earl A. Powell, Bonnie Clearwater, Irving Sandler, Dana Cramer and Eleanor De Sole. Two of these witnesses, Earl A. Powell, director of the National Gallery, and Bonnie Clearwater, former head of the Mark Rothko Foundation, were not present and their pre-trial depositions were read into the court record. Witnesses who did take the stand on the last day of the first week included Professor Irving Sandler, one of the foremost authorities on abstract expressionism; Dana Cranmer, a conservator and Mrs. De Sole.

Professor Sandler, an art historian and formerly a member of the Rothko Foundation Board who indicated that he was not “one of the foremost” but “THE foremost authority on Abstract Expressionism would frequent galleries for a number of reasons including gossip. He mentioned that at one point Knoedler was on his gallery track because it was one of the most important galleries in New York, for two reasons: 1. its history and 2. the caliber of art it sold. When at Knoedler, Prof. Sandler testified that he had no reasons to doubt authenticity of art shown because of the Gallery and Ann Freedman context.

Looking forward: As the second week is already on its way, how important is this Knoedler trial? Only the time will tell but the case has attracted a considerable amount of attention in the news and lively attendance in the courtroom. Those observing the first week, not including the jury members, were art dealers, court illustrators, journalists (many journalists), art attorneys, including some working on other Knoedler cases, law students and friends of the parties to the case. Given that this Knoedler trial may become the playbook for other pending Knoedler cases as well as a seminal case for art and wire fraud precedent the upcoming week promises to be just as entertaining.

Select Sources:

Disclaimer: Reading “Wish You Were Here” articles in no substitute to attending art law events, trials and programs. This and all http://www.itsartlaw.com articles are for educational purposes only. It is not meant to provide legal advice. Readers should not construe or rely on any comment or statement in this article as legal advice. Instead, readers should seek an attorney.

The Cost of Donating Artwork: Can Artists Afford to Donate Their Own Artwork?


By Emma Kleiner*

Screen Shot 2016-02-01 at 2.00.08 PM

Sample press release about a gift (2011 The Philadelphia Museum of Art).

At the Tucson Medical Center in Tucson, Arizona, the Healing Art Program’s mission is to fill the hospital with art that lifts the spirits of the patients and creates a serene environment. Lauren Rabb, the Curator of the Healing Art Program, manages that task, which includes arranging works from the hospital’s private collection and searching for new donations. It may seem curious, then, that when Rabb began her work at the Hospital she would not consider asking an artist to donate his or her own work. To professionals in the art world this hesitance makes sense: unlike art collectors, who are incentivized to donate artwork because they may deduct the fair market value of the work from their taxable income, artists may only deduct the value of their supplies – which likely amounts to the negligible cost of paper, brushes, and paint. In an interview for Center for Art Law, Lauren Rabb, who once also owned a gallery and worked as a museum curator, stated: “Everyone in the art world has come into contact with this [tax provision].”

Under § 170 of the Internal Revenue Code of 1986 and § 1.170-1(c)(1) of the Code of Federal Regulations, when a taxpayer makes a charitable contribution of tangible property, including artwork, he or she may deduct the fair market value of that tangible property from his or her taxable income. The law is designed to provide an incentive to collectors to donate artworks to nonprofit educational institutions such as museums and libraries. However, as a result of the passage of the Tax Reform Act of 1969, “creators,” such as artists, writers, and choreographers, are excluded from this tax provision. Instead, creators may only deduct the cost of their supplies from their taxable income. Thus, while collectors may be motivated to donate artwork due to the favorable tax benefits, artists are asked to give away their artwork essentially for free.

The origin for the disparate treatment of artists and non-artists dates back to the 1960s, when Congress was galvanized to close a perceived loophole after public officials and politicians capitalized on their status as creators of their own papers and manuscripts. Presidents Truman through Johnson reaped very favorable tax benefits when donating their presidential papers. Supporters of the Tax Reform Act of 1969 derided the ability for public officials and politicians to deduct the fair market value of their papers – papers that arguably belonged to the public in the first place. The timing of this reform put President Nixon’s donation of a portion of his vice presidential papers in 1969 at risk. President Nixon’s Vice Presidential papers were valued for tax purposes at $576,000, which appeared to be a very favorable appraisal to many observers, even exceeding Nixon’s gross income for 1970. To take advantage of the pre-1969 tax break though, Nixon backdated the deed transferring title of his papers. That deduction helped to reduce his taxable income to zero – in fact, the $792 he paid in taxes in 1970 was a result only of the alternative tax minimum. In passing the Tax Reform Act of 1969, Congress was concerned that if they failed to close this loophole, other creators would take advantage of the tax provision allowing for a deduction of fair market value of their works. Notably, these examples relate to documents and written materials rather than works of visual art.

The effect of the revision of the Internal Revenue Code in 1969 was immediate: donations of works, including artwork, manuscripts, and other scholarly collections, by their creators came to a halt. For example, in the three years prior to 1969 the Museum of Modern Art in New York received 321 donations from artists, but in the three years after 1969 the Museum received only 28 donations from artists. Strikingly, the Library of Congress, which customarily received around 15 donations from authors per year, received one donation in the four years after 1969. The National Archives, within just days of the passage of the Tax Reform Act of 1969, noted a visible decline in gifts of papers made to the government.  

This trend was particularly significant for museums and libraries, which depend on the public to a large extent to grow their collections. Museums, which must rely on their endowment and funds to support their staff and the costs of running a museum, need donations to grow their collections. It is estimated by the Performing Arts Alliance that 80% of objects in U.S. museums arrive as donations. Furthermore, the connection between donations and tax benefits is clear. In Artful Ownership, author and attorney Aaron Milrad wrote, “Historically, most museums and public institutions have received their finest works through donations[,] . . . [and] the donations are made, at least in part, for the tax benefits available to the donor.” Today, because of the insignificant tax break for donating artwork, artists often sell work that they would otherwise consider donating to a cultural institution or nonprofit, and the public is thus denied the benefit of that art.

Although the possibility for valuation abuse that spurred support for the Tax Reform Act of 1969 will always exist, there are many reasons to believe that deceptive or exaggerated valuations are not likely to occur and that Congress could safely adopt a measure restoring the law to its pre-1969 condition. The Senate currently has such a bill in front of it: the Artist-Museum Partnership Act (“the Act”). The Act, proposed by Senator  of Vermont, would give artists the ability to deduct the fair market value of their works while providing additional safeguards to prevent any abuse of the tax provision.

The Act has been introduced in the Senate seven times since 2000, most recently on April 14, 2015, but it has not gained much traction or become law. To reduce the ability for creators to take advantage of a tax provision allowing for the deduction of their donated works at fair market value, a qualified appraiser must determine the fair market value of the tangible property. Moreover, the tangible property must be created no less than 18 months prior to the contribution, which stops an artist from creating and donating a piece of tangible property in quick succession simply to gain a tax advantage. Finally, the Art Advisory Panel at IRS, which was established in 1968 to help IRS review the fair market value of works of art, should also help to curb any appraisals of art that raise red flags. Given these safeguards, such “phantom abuses” should not prevent the United States from supporting creators in their artistic work.


Screen Shot 2016-02-01 at 2.04.47 PM.png

Note credit line of the controversial Rauschenberg work that includes a stuffed bold eagle. MoMA.

Amending the IRC by passing the Act or comparable legislation would be one step towards rectifying the unfairness with which artists and other creators have been treated for the past decades and undoing the harm to museums, libraries, and other institutions that have limited acquisition funds. It would serve the fundamental goal of generating public access to the arts and helping museums grow their collections. In advocating for passage of the Artist-Museum Partnership Act, Senator Leahy stated: “We have a lot of contemporary artists in this country who have this artwork, and ultimately the public wins. The public gets to see artwork they might not have seen otherwise, unless they were visiting somebody who’s a private collector.”


At present, by disallowing the deduction of the fair market value of artwork when donated by its creator, the Internal Revenue Code creates a schism between taxpayers where there should be none. It is only fair that collectors and creators, who are identical taxpayers and donate the same types of works, receive the same tax benefit of a donation.

Note: For this interview, author interviewed Lauren Rabb, Curator of the Healing Art Program at Tucson Medical Center in Tucson, Arizona. More information about the Program is available on their website: http://www.tmcaz.com/healing-art-program.


*About the Author: Emma Kleiner is a student at Stanford Law School. She can be reached at ekleiner@stanford.edu.

Disclaimer: This article is for educational purposes only and is not meant to provide legal advice. Readers should not construe or rely on any comment or statement in this article as legal advice. Instead, readers should seek an attorney.