Kaul – Tax Court of Canada finds that art work was donated at a FMV equal to its cost rather than appraised value
The taxpayers bought sets of artists’ prints (each set consisting of 11 prints) at a purchase price that might be 7 or 10 times the vendor’s cost, and then immediately donated 10 out of the 11 prints in each set to registered charities at appraised values (reflected in the charitable receipts issued) around 3 times their purchase price. In confirming assessments that found the FMV of the donated art was the taxpayers’ purchase price, Rossiter CJ essentially applied the statement of Bowman ACJ in Klotz that:
Why chase the will o' the wisp of an elusive and largely hypothetical fmv through the trendy up scale art galleries of New York and ignore the best evidence that is right there before your very nose? The problem with the claim here, whereby property is acquired for $5 to $50, sold to the appellant for $300 and claimed to have a fmv two days later of $1,000, is that it is devoid of common sense and out of touch with ordinary commercial reality.
Rossiter CJ commented scathingly on the appraisals.
Neal Armstrong. Summary of Kaul v. The Queen, 2019 TCC 17 under General Concepts – FMV – Other.