This article from Forbes magazine raises a vexing tax question - how can you place a value on a Medal of Honor, which cannot legally be sold in the U.S.? A Medal of Honor, found in a book purchased at a church book sale, has been donated to an historical society. But can the donor take a tax deduction for their gift?
The Pejepscot Historical Society (PHS) has just announced that it has added Joshua Chamberlain’s Medal of Honor to its collection. It is quite appropriate for PHS to be the custodian of this priceless item, since it runs the Joshua L. Chamberlain Museum which is housed in the building where General Chamberlain and his family lived from 1856 until his death in 1914.
How the anonymous donor (AD) came on the medal is a great New England story. According to this story in the Times Record, Chamberlain’s last living descendant, his granddaughter Rosamond Allen, left her estate to First Parish Church of Duxbury when she died in 2000 at the age of 102. The church held a book sale. Having been to many a church book sale, I am trying to picture it in my mind. Was it a few piles of books on tables going for a couple of bucks ? I dabble in books a bit and am well aware most books, even if quite old, are not worth very much, but there will often be the odd unrecognized treasure in the pile.
Taking it home, the donor finds the medal in there. It was a generous act to then give it to just the right organization anonymously in honor of all veterans. It might be good to leave the story there, but I’m a tax geek and I can’t help but wonder if the donor is entitled to a charitable contribution and, even more interesting, how much that contribution might be.
A Minor Flaw In The Chain Of Custody
A Medal of Honor is the personal property of the recipient and the recipient can do as he pleases with it, except that it is illegal for the recipient or anybody else to sell the medal. I’m wondering if this casts just a little doubt on the ownership. First Parish of Duxury sold a book which happened to have the medal in it. The Church could not have legally sold the medal. We probably don’t want to think too hard about that, since we should be happy with where the medal ended up. Let’s assume that AD was the valid owner and to be more pedantic that the medal was a capital asset in AD’s hands and had been owned for at least a year. We have to further assume that AD will surrender enough anonymity to be able to get an acknowledgment from PHS.
What Is The Value ?
You might think that the IRS would argue that the medal can have no monetary value, since it is illegal to sell it. That position would be inconsistent with the position that the IRS and its Art Advisory Panel took in the Sonnabend Estate. The estate owned a montage called Canyon created by Robert Rauschenberg. Part of the montage was an honest to goodness real American bald eagle. That is something else that it is illegal to sell. The estate valued the work at $0 but the IRS valued it at $65 million positing a hypothetical reclusive Chinese billionaire as a likely buyer. I don’t know if they would change their tune with the shoe on the other foot, but the Art Advisory Panel is supposed to do the valuations without knowing whether the purpose is estate and gift tax, where the IRS prefers a higher value or charitable contribution.
I asked my friend, Matt Erskine, who wrote a guest post on the Canyon controversy, for his thoughts on the value of Chamberlain’s Medal of Honor. Matt has a boutique law practice that focuses on “unique assets”. Matt suggested that a good indication of the value of Chamberlain’s Medal of Honor might be derived from the selling prices of Victoria Crosses, which are legal to sell. Rather than posit a hypothetical reclusive billionaire, we can just imagine Lord Aschcroft, who has cornered the market on Victoria Crosses deciding to diversify a bit. Here is Matt’s analysis:
What, then, is the value of donation of the Medal? Probably the only way you could value the donation is to compare the Medal to the sale of the highest military decorations for valor of other countries. The Victoria Cross, the highest military decoration in the United Kingdom for Valor, can be sold and, at auction, usually sells for between $245,000 to $315,000.
Even though the value may be lower because a Civil War Medal of Honor (they were given out much more frequently than they were later) they are roughly comparable in rarity. So a good start would be, say, $245,000.
The value, however, includes the unique title to the Medal, the provenance in the Art World jargon. Joseph Chamberlain is famous; an officer commanding during one of the most pivotal battles of the war, present at the surrender of Lee at Appomattox, and later President of Bowdoin College and Governor of Maine. There is even good title on how it came to the church sale.
The title of a Medal makes a great deal of difference. Where the medal is given to an officer, and the officer is well known, the price would go up considerably. For example, the Victoria Cross awarded to Captain Noel G. Chavasse, a medical officer (awarded posthumously) for service saving lives in Flanders during WW I sold for 1.5 million pounds ($2.36 Million).
To read the complete article, see:
Chamberlain Medal Of Honor Raises Tax Question - Can You Value What Cannot Be Sold ?
Wayne Homren, Editor
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