Notes on a book from our Reference Library:
Smith Theobald, Sharon.
To Give and to Receive. A Handbook on Collection Gifts and Donations for Museums and Donors. Second Edition.
Lanham: Rowman & Littlefield, 2021.
The IRS code is far more than a mechanism to collect revenue. At its core, it is the implementation of public policy. Most agree that society benefits when cultural objects are preserved by museums and universities. Our elected representatives thus enacted laws to incentivize those with large tax bills to reduce their obligations by donating rare books and other collectibles to institutions.
Charitable contributions are an important facet of the book trade, and it behooves dealers and collectors to have a basic framework of the how and why of the contribution process. As many booksellers are aware, the IRS changed its regulations in 2019 pertaining to the definition of a qualified appraiser and qualified appraisal. I searched for a recently published book on the subject, which would incorporate the latest rules and found Sharon Smith Theobald’s: To Give and to Receive. A Handbook on Collection Gifts and Donations for Museums and Donors. Second Edition.
The question of what is value is a philosophically fascinating one.1 Not only hard for us to define, but hard for the IRS to grapple with. The concept of “value” raises so many questions – why is a particular book worth a million dollars? Why might something that sold at auction in the 1950’s for $5,000 now be worth $250,000? And who has the right to assign value and thereby reduce the financial contribution of wealthy (and not so wealthy) individuals to the collective pot? These are very difficult questions to answer and have resulted in hundreds of pages of IRS regulations.
Smith Theobald’s book does a decent job of setting forth the basics, from the perspective of the donors, the institutions, and the IRS. There is a lot of practical advice on how to structure a “gift deed”, how to approach a “bargain-sale” (in essence, a below market-value sale that gives the seller a partial tax-benefit), the types of uses institutions may make of the donated property without running afoul of IRS rules, and so on and so forth.
The most interesting piece of advice is that the IRS allows donors with exceptionally high-value items to seek a ruling on value prior to filing their tax return. This is known as a “Statement of Value” and the fee from the IRS is $7,500 for one to three items (and $400 for each additional item – as of February 2020). Expensive, but in some circumstances, well worth the cost and effort.
Smith Theobald’s book answered my questions and then some: No, a qualified appraiser does not have to take appraiser classes. No, an institution is not required to see the donor’s appraisal. Yes, an appraiser by virtue of making an appraisal for the IRS is taking a position on authenticity (in essence, confirming that the donated item is not “fake”). Unfortunately the editing and book design could be improved; at times the book reads like a well-made conference package.
We end with a short missive on value:
“Where is value bred?
Tis in the heart and in the head.” 2
1. James Grant in his book Mr. Market Miscalculates (Mount Jackson: Axios, 2008) published financial cartoons with punchlines of: “What’s the valuation? What’s the valuation? The market’s going up. THAT’S the valuations!” (pg. 37), or “Well, I just like bought it, and it kind of, you know, tripled [in value].” (pg. 52). Humor is merely disguised truth, and as these jokes bring to light, value is more complex than finding a comparable auction record.
2. With apologies to Shakespeare & cribbed (with minor modification) from Alex J. Pollock’s book Finance and Philosophy (Philadelphia: Paul Dry, 2018).