Law Commons^™

Art Resale Royalty Options, Herbert I. Lazerow

Faculty Scholarship

Proposed federal law requires payments from the reseller of art to an artist when her work is resold. They can be conceptualized as a substitute for copyright royalties or for the profits of a joint venture between the artist and the collector. Application is analyzed by art type, especially multiples, place of sale, and nationality or residence of the seller, buyer, intermediary or artist, and by what constitutes a sale in a world of leases, exchanges, gifts, bequests, charitable donations, loans and casualty losses. If the base is gross sales price, is that the amount the seller receives, the amount …

Below Market Loans: From Abuse To Misuses – A Sports Illustration, Phillip J. Closius, Douglas K. Chapman

All Faculty Scholarship

Below market loans have been traditionally used as substitutes for gifts, salaries, and dividends for the primary purpose of tax avoidance in the transfer of wealth. The Supreme Court's opinion in Dickman v. Commissioner subjected both demand and term loans in an intrafamilial setting to the federal gift tax. Congress, while subjecting all below market loans to either income or gift tax, applied different valuation formulas to term and demand loans and, in so doing, favored the use of demand loans as a salary substitute. This Article analyzes the current status of below market loans by examining their use in …

Artists, Art Collectors And Income Tax, Alan L. Feld

Faculty Scholarship

The federal income tax law treats artists and art collectors differently. Similar transactions concerning artworks produce disparate income tax results, depending on whether they involve the artist or the collector. On balance, these results seem to favor the collector over the artist. But notwithstanding the dismay of some artists and their advocates, the differences in result flow, in the main, from the differences in the source of the taxpayer's investment in the work.

The collector buys the work with after-tax income. Any gain is properly treated as an investment return and is eligible for capital gain benefits.' The collector, however, …