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. The story discussed here applies only to the extremely wealthy, and such people don't deserve any pity for having to contribute back to the society that allowed them to accumulate such wealth.

>The story discussed here applies only to the extremely wealthy, and such people don't deserve any pity for having to contribute back to the society that allowed them to accumulate such wealth.

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.

What if I make my own (admittedly very crappy) art? I probably wouldn't be able to get $1 for it because it would be so bad, and it's totally unique so by definition it can't be valued by the sale of similar objects on the market (any art is just like this). So should I be forced to pay millions of dollars in taxes on it?

Don't be absurd. The object in question is not value-less, it is illegal to sell. It's an awkward corner case, not something to get upset about.

Your assumption is that the IRS's right to override appraisers comes with a fine print that says "applicable only in an awkward corner case" (in this case "items that cannot be legally sold"). I'm pretty sure if they're indeed allowed to do this and the conditions are defined as narrowly as possible (still to be decided in court I guess) then it can be easily abused. And the article doesn't suggest that such an exception exists.

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.

Please use some common sense here. If you couldn't even sell it for a $1, then how are you expecting it to be valued at more than $1?

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).

What happens when it doesn't involve a [mb]illionaire but regular people?

How do you imagine a non-[mb]illionaire would find themself in this situation?

In the situation of dealing with the IRS for any kind of inheritance they have to pay taxes for? Or actually anything they own if it turns out the IRS can simply have it's own estimation of value and taxes based on that?

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).

People fear the day the authorities proclaim their [inherited art collection] to be 10x the value from yesterday...

Fixed that for you. This situation is literally not applicable to 99.999% of the US population.

But if you assume that the IRS did this "by the book" then for your statement to be true the rules governing the process must state "only applicable to art collections". This is a bit of a stretch don't you think? If such a rule that gives the IRS the right to override an appraisal exists then it would extend to anything. Even if you only consider such corner cases eventually you'd find situations where you don't have to be a billionaire to be affected.

And there's no reason to believe the IRS can do this only when talking about art that can't be sold.

I'm a tax lawyer, dude, I deal with the IRS on a regular basis and have successfully managed an IRS challenge to a client's (sports memorabilia) collective appraisal.

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.