In this case, the art seems to be nearly the entire estate.
Nobody here is crying for rich people having to pay taxes on assets with a value that can actually be realized - this is a question of fairness and logical consistency. At exactly what level of wealth are you arguing that the government should be able to make logically inconsistent determinations about how much you owe them?
>If someone is in a situation where their property's valuation cannot be evaluated by the sale of similar objects on the market, then they are without exception able to afford to pay the taxes on it.
If anything this article proves that the exact opposite is possible. If I owned "Canyon" - which I can't sell - and my remaining assets are valued lower than the tax on "Canyon" based on the initial IRS assessment, then I couldn't afford to pay the taxes on it.
And that's not even discussing yet the process through which an appraisal gets bumped up by over 300% between 2 steps that were both considered to be solid enough to actually be sent out.
The IRS valuation of art and other collectibles is based on polling independent third-parties the likely fair-market value of the art/collectible at issue. If the situation proceeds to court, then they develop a formal appraisal (or occasionally hire an independent third-party appraisal, depending on the item being examined).
If the IRS can just blurt out their own evaluation overriding any independent appraiser, even bump it up 300+% between draft and final evaluation, and tax you based on it then yes I do see quite a few people in this situation.
I'll try to assume the best interpretation of what you wanted to say and guess that maybe you didn't think that if the IRS can do this for a $1bn inheritance (than can or cannot be sold) they can also do it for a $100 inheritance. It's the principle of them being allowed to make the authoritative appraisal (not their job) that's the issue here, not that they collect taxes (their job).
Fixed that for you. This situation is literally not applicable to 99.999% of the US population.
And there's no reason to believe the IRS can do this only when talking about art that can't be sold.
The IRS does not have the right to override an appraisal.
What happened was this: taxpayer valued art at $0 without any supporting evidence. IRS special panel for appraising art (comprised of professional appraisers and art museum curators) valued art at $X million without knowing that it was illegal for taxpayer to own said art (because the law allows museums to own such items). Taxpayer challenged, saying they couldn't actually sell art for any amount, and the IRS agreed and waived the assessment in exchange for the taxpayer relinquishing ownership of illegal item to a museum.
The only reason the kids in this situation even "owned" the art was a special dispensation given to their ancestors--not them--allowing them to "own" the art (a stuffed eagle) while it was in the possession of a museum. The dispensation didn't actually give the ancestors the power to transfer ownership to their children and there was a legal question that it could even be inherited.
Unless you have an inherited art collection worth millions, this will never happen to you.
In this case, it wasn't necessary because the children agreed to turn over the inherited stuffed eagle to a museum and the IRS agreed that it had no sales value in the hands of a non-museum.
Just because a safety net exists doesn't mean the IRS should be shoving people into it.