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Comment by olliej | Hacker News Reader

I appreciate the person on the IRS valuation board saying "we didn't consider the eagle issue" "saying it was worth $0 made us cringe". WTF?

The only reason to be on a valuation committee is to give a real valuation. Its got nothing to do with whether or you like the market value.

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Quite obviously the value is greater than zero. Even if you can’t sell something it can have value.

Yeah but this is a priori absurd. They can't sell it, they don't want it, and you tax them for getting it? Insanity.

That seems to be a very common bureaucratic flaw - the absurd position is maintained out of interest because of their job.

This is well known but the real question is how to prevent that in a reliable way that doesn't open up more problems?

It is more that the absurd position is maintained because their jobs is to execute the law. If the law is absurd then you get absurd results.

It might be a fake and be worth $0.

Since the IRS are considering hypothetical black market sales, they should consider that it's hypothetically a forgery too.

Something is only worth as much as someone is willing to pay.

Seeing as how it's a felony to buy it, nobody is going to offer anything for it publicly.

There might be a way to make money from the painting without selling it. For example, are they allowed to rent it out to a museum?

Then the money earned leasing it out would be taxable, but you still can't sell it so there's still an issue with taxing its value

I can think of quite a few ways for something to be worth nothing, or less than that - for instance, would you be willing to take ownership of, and responsibility for, a lovely stretch of a former canal in the Niagara Falls area? [0] And that's ignoring synthetics, as of course debt has negative value.

0: https://en.wikipedia.org/wiki/Love_Canal

"of course debt has negative value"

Does it? You are basically paid in advance, surely that should be getting taken into account.

Yes I suppose debt can have a negative value if the interest rate is too high, but if you borrow money at a low interest rate to start the next google, that debt doesn't seem to have negative value to me.

That is the loan not the debt. A loan is a combination of the real payment and debt which has utility. Without the real payment only the negative debt remains.

Yes, but they go together as a package, you can't separate it out, you have got something in return for that debt. Most (all?) assets have liabilities attached, that gold bar has warehousing and insurance costs, that diamond mine has employees that want paying. It isn't reasonable to argue that they have negative value, because you're ignoring the positive value that comes with it.

> Most (all?) assets have liabilities attached,

The point is that not all liabilities have assets attached.

If it doesn't make you any money but costs money to maintain, its value might even be negative.

Can you list some examples of things you can't sell that the IRS ought to tax?

The part that isn't apparent in this 7-year-old article was that the appraisal board, comprised of museum curators and professional appraisers, was not informed that US law makes it illegal to actually own stuffed eagles, unless you're a museum.

So they evaluated it as a work of art, and as museum curators they weren't aware that it wasn't legal for the owners to actually own or sell the eagle. Hence, the large valuation for the unsaleable item.

(This case was resolved 6 years ago.)

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