As posted at the Art Law Report two weeks ago, a settlement of the IRS dispute over Robert Rauschenberg’s work “Canyon”—which incorporates a stuffed bald eagle, thus implicating criminal statutes prohibiting any sale or transfer of the national bird—has been announced publicly.
According to public reports, the heirs of Ileana Sonnabend, who inherited the work that the IRS valued at over $65 million for estate tax purposes (allegedly triggering $29 million in tax and $17 million in penalties), have decided to donate it to the Museum of Modern Art in exchange for an agreement with the IRS not to claim any charitable deduction associated with the donation. This is a significant victory for the estate, because the mere donation of an object by an estate after the death of the owner does not otherwise affect the tax liability. As a general principle of tax law, once someone has “dominion and control” over property on which tax is due—whether as a gift or inheritance, for example—the tax owed is not avoided just because he or she then donates it for a charitable purpose (although it may be reduce if a charitable deduction is allowed). Nor, as the IRS had pointed out, is an illegal object per se value-less. Even if worth orders of magnitude less than the IRS had demanded, “Canyon” would likely have been found to have a value greater than zero, and the heirs will now avoid any tax. All of this is another way of saying that the donation only solves the tax problem if the IRS agrees; trading a charitable deduction for that is well worth it and a significant accomplishment by the heirs and Ralph Lerner, their attorney.
Unaddressed in the coverage so far is why the donation itself does not trigger the original impediment, namely, the criminal statutes. Under the 1940 Bald and Golden Eagle Protection Act, 16 U.S.C. § 668, it is a crime for anyone knowingly to “take, possess, sell, purchase, barter, offer to sell, purchase or barter, transport, export or import, at any time or in any manner any bald eagle commonly known as the American eagle or any golden eagle, alive or dead, or any part, nest, or egg thereof of the foregoing eagles.” On the face of that language alone, the donee (the museum) could be said to have “taken” the bald eagle.
The answer likely is statutory. 16 U.S.C. § 668a provides that when the Secretary of the Interior determines that “it is compatible with the preservation of the bald eagle or the golden eagle to permit the taking, possession, and transportation of specimens thereof for the scientific or exhibition purposes of public museums. . .” the “taking” may be allowed where it would otherwise be prohibited. Native Americans are also exempted for religious use of bald eagle artifacts.