Expert: DJ Murphy - 3/23/2007

Question
I have a friend who is an artist. His framed watercolors, when shown in a
gallery, sell for $1500. The large 5'x6' oil on canvas paintings are priced at
$4000 to $5000.

We've been having a theoretical discussion...would the paintings he has in his
possession, that have not been sold, be appraised at the same price as the
ones he has priced for the gallery? He has sold some works at the prices he
has put on them.

Or because no one has bought the ones he still has, are they only worth the
wood, canvas and paint?

I would appreciate your answer!

thank you very much, gin

Answer
Hello.........although I am not a "tax expert' nor an appraiser, I can't offer an opinion on the "appraised" value of your friends paintings.  However having said that, you should know most appraisers use "comps".....just as in real estate to determine market value.  I would offer that if your friends works sell for $$$ then the ones that are still in his inventory would be appraised for a like amount.

You might also want to read what the IRS has to say:
http://www.irs.gov/publications/p561/ar02.html#d0e589

Best to you,

dj murphy