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Inherited art work basis

My sister and I inherited art work from my father's estate almost 15 years ago. It was appraised by an art dealer at the time for quite high values, we thought, since these were not Picassos, but be that as it may, we have had a terrible time selling it. I placed it at a prominent art gallery on consignment and they could not sell it themselves, despite price reductions. Finally this year they and I decided to try some local art auctions, and finally most, if not all (we are still waiting for a January auction) have sold.

The gallery AND the auction house takes a cut, but even before that, the gross sales amount of any of the individual pieces is substantially less than the original appraised value. I'm not even sure if the gallery is going to 1099 me (since I arranged everything) at all, or if so, for which amount, but I'd like to know how we establish the cost basis of these pieces. Did we get the original appraiser's estimate from when the estate was going thru probate? Or some other stepped up basis? Or 0? We would have losses if the original appraised value was used.

Any thing you could clarify about this area would be a help.

jo

Reply to
jo
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The basis is the FMV at the time of death; the appraisal should be fine. Under the new law, if there was an estate tax return, you would be _required_ to use the value as stated on that return; but that only applies to deaths in 2015 or later.

Normally, you cannot take a loss on personally used items, but it seems you've been trying to sell them all this time, so that restriction may not apply, either.

As you probably know, commissions reduce the selling price if reported on the 1099, or add to the basis if not reporting on the 1099; they are not separately reportable expenses.

-- Arthur L. Rubin CRTP, AFSP (2015, pending 2016) in Brea, CA

Reply to
Arthur Rubin

Yes, you are correct that we never used the art for personal use at all. It went to the gallery in 2005 very soon after we received it from the estate attorney. It's taken that long (10) years to get any movement on it at all. I'm not sure if the original appraiser was wrong in his values, or if, as the gallery told me, it's been a terrible market for art, but we do have a copy of the original appraisals. I also did understand that the commisions should not be listed as separate expenses, just used to adjust the basis or selling price. Since the most valuable painting was appraised at #13K and sold for $4K (less commissions) I guess I will have a capital loss, regardless of how much I get a check for. I assume I'm correct that this gets entered on Schedule D, one way or the other, right?

Reply to
jo

Yes, Schedule D. Recently (starting 2013?), all entries on Schedule D flow from other forms, usually 8949. I'm also sure you know you can only claim net capital losses to the extent of $3,000 per year; the excess is carried over.

-- Arthur L. Rubin CRTP, AFSP (2015) in Brea, CA

Reply to
Arthur Rubin

Yes, Schedule D. Recently (starting 2013?), all entries on Schedule D flow from other forms, usually 8949. I'm also sure you know you can only claim net capital losses to the extent of $3,000 per year; the excess is carried over. ======= With regard to the change in value over 10 years, that is NOT an indicator that the original appraisal was wrong. Art is one of those items where the market is driven by discretionary income, and that itself has decreased over the past decade.

Reply to
D. Stussy

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