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Tax Professor Casts Ray of Sunshine on Yard Sale Bargain Hunters

By Eric Lipman

Since federal income taxation is not covered on the bar exam (at least as far as I can recall), few aspiring lawyers were likely thinking about it this week. Luckily, Paul Caron at the TaxProf Blog was. Because, you know, that's his job. This morning he analyzes the tax consequences of what he calls the "mother of all yard sale bargains." Some dude named Rick Norsigian was yard sale shopping in California about 10 years back and bought two boxes of glass photographic plates. He bargained the seller down from $75 to $45. Good haggling, Rick. As it turned out, these plates were apparently the work of Ansel Adams. Yes, that Ansel Adams. Norsigian hired experts to authenticate the plates, and, as reported by Norsigian's lawyer (natch), they concluded that the plates were, indeed, Adams's work and might be worth $200 million, though the famed photographer's heirs aren't convinced. Anyway, back to tax. Caron raised and answered the question: Does this guy have to report $199,999,955 in income, assuming his claims as to authenticity and value hold up? Luckily for him, that's a negatory: The leading case [on the IRS's "treasure trove" regulation] is Cesarini v. United States, 296 F.Supp....

Full post as published by Legal Blog Watch on July 29, 2010 (boomark / email).