How to value something that can't be sold

I am indebted to that doyen of the UK tax world, Robert Maas who has written about this on his blog. I will simply summarise the issue here.

The case involved the need to impute a market value to a work of art called “Canyon” by Robert Rauschenberg. This is a collage. Unfortunately it incorporates a stuffed bald eagle. It is a criminal offence in America to sell a bald eagle under the Bald and Golden Eagle Protection Act 1940.

The owner didn't sell it but, when she died, the question was what value to place on the collage?

Three separate art appraisers told the executors that “Canyon” is valueless as all that the owner can do with it is gift it to a US art gallery. The IRS disagree. They say, apparently, that the executors should be able to find a reclusive Chinese billionaire who would buy the artwork on the black market and smuggle it out of the USA in order to hide it away. On this basis the IRS value the artwork at $65million. They are also apparently seeking a $11.7million penalty for “gross valuation misstatement” even though the executors accepted the unanimous view of three separate professional valuers that the artwork had a nil value!

Not so much a tax funny as a bizare true story, worth sharing I thought. If you agree do read the full story on Robert's blog.

The purchase ledger accountant's lament

Piles of purchase invoices, in all colours and sizes
Apparently so varied but with very few surprises
The Boss will read them carefully before he authorises
Then it’s my job to process them as my blood pressure rises

I say each number quietly to get it in my brain
And as I type it to the screen I say it once again
The others in the office think my mumbling’s a pain
They say it shows I’m mad, but can I promise you – I’m sane!

Once input to the system I’m so careful where I pile ‘em
Too close to the window, they’ll be gone before I file ‘em
And that would be the end of me, straight off to the asylum…
My loving caring colleagues would be very quick to dial ‘em

So here I am, an invoice clerk until the bitter end
Most of the time I work real hard but sometimes I pretend
I’m living in a different world, with mates and cash to spend
Oh please won’t someone rescue me? I’M GOING ROUND THE BEND!

Written by Sean Kelly.

Proposal for a Mustached American Tax Incentive

The American Mustache Institute, an organization that has tasked itself with protecting the rights of and fighting discrimination against mustached Americans by promoting the growth, care, and culture of the mustache, has proposed a $250 tax deduction for the cost of mustache grooming supplies.

The so-called “Stache Act” is based on a paper by Dr. John Yeutter from Northeastern State University titled “Mustached Americans and the Triple Bottom Line: An Analysis of the Impact of the Mustache on Modern Society and a Proposal for a Mustached American Tax Incentive.”

In the paper, Dr. Yeutter examines the environmental, social, and economic impact of the growth and maintenance of labia secuculas (Latin for “lip sweaters”). He concludes that “stached” Americans should be provided an itemized deduction for expenses exceeding 2 percent of their adjusted gross income.

Some of the expenses listed in the paper include:

• Mustache and beard trimming instruments
• Mustache wax and weightless conditioning agents
• DVD collections of “Magnum P.I.” and “Smokey & the Bandit”
• Burt Reynolds wallet-sized photos

Lord Harman's predictive quote

In a 1964 speech British law lord, Lord Justice Harman, told an audience:

‘Accountants are the witch doctors of the modern world and willing to turn their hands to any kind of magic.’

I note that this quote appears on dozens of firms of accountants' websites.

(You need to know me to know why that quote so appeals to me. There's a clue in this earlier posting on this blog)

It can be expensive being a tax adviser

Arriving by train in Penrith, Cumbria, to present a talk to the local CIOT branch, I took a cab to the venue. The driver asked me what I was doing in Penrith and I explained:

“I’m here to give a lecture to a group of tax advisers”.

For a moment I was thrown as he seemed very miffed. It then became clear from his reply that he had misheard me:

“It would be nice to have been invited. I’ve been a taxi driver here for over ten years!”

I was unable to keep a straight face!

I shared the story during my talk and at the tea-break one of the delegates came over to explain she’d had a similar problem recently.

When arranging her car insurance by phone, she was astonished by the premium quote. It was more than 8 times what she had paid the previous year. She queried the figure and was told this was due to her profession, and the risks inherent in this.

“What are the inherent risks of being a tax adviser?” she asked.

At which point it became apparent the insurer had thought she said she was a ‘taxi driver’.

A Sexy Poem About Kashflow

This poem was contributed by Sue Lee (no relation) to the kashflow Valentine's day facebook competition. For those who don't know, kashflow is an online accounting software package.

Sue says her poem was written "in the style of Jane Birkin and Serge Gainsbourg (with apologies to the easily offended. And poetry lovers."

I knew it was forever the first time that we met;
You understood my discount yield and reconciled my debt.
You deftly spread my balance sheets and made me lose control;
Accounts became receivable; you filled my software hole.

My profit margins maximise whenever you are near;
My lump sums get much lumpier; my hedge fund feels all queer.
You use your column expertly to maximise returns;
My assets start to liquify; my compound interest burns….

You touch my bottom line with skill and fondle my arrears;
Your double-entry bookkeeping can leave me close to tears.
My cash has never flowed so well, my funds are all now sunk;
Oh, come and lay me off to tax, you great big Kashflow hunk!!!

I can destroy you, Moira Stewart tells self-assessment taxpayers

Well - at least that's what 'The Daily Mash' (a satirical online newspaper) is reporting. Their spoof article continues:

MOIRA Stewart, the all-seeing God of Tax, has warned of great suffering for those self-employed workers whose forms displease her.

Powerful divinity Stewart, whose earthly guises include a semi-likeable middle-aged woman, a grey fox and a fire-breathing lizard with nine heads and 43 tusks, has assured mortals that she will not be made a mockery of as the Great Deadline of January 31 approaches.

Stewart, also known as Brabarine or 'The Taxacious One', said: “The hour of self-assessment is nigh.

“But heed my words – a Tesco carrier bag full of crumpled receipts and sweet wrappers does not represent adequate record keeping.

“Nor can you simply make up a number, times it by four and call it your 'mileage allowance'.

“I have many eyes and many ears. My minions include HMRC inspectors, birds and little insects that land on my shoulder and chirrup of your lies.”

Stewart's main shrine, The Golden Temple of the HMRC Dawn, has been inundated with offerings from workers anxious to curry favour with the implacable god.

Scaffolder Tom Logan said: “After sending my tax return, I became paranoid that I may have somehow forgotten to include about six months' worth of cash-in-hand work.

“So I've brought this fatted calf and plan to kill it in the reception area, hoping that it will encourage Moira Stewart to be merciful.”

Meanwhile thousands of concerned self-assessment taxpayers are trapped in the Celestial Maze, also known as the HMRC Helpline.

Masseuse Nikki Hollis said: “There are many menus, each one promising to lead you to an advisor.

“But they only lead to further menus, or a recorded message telling you to go to the website. And if you accidentally press '3', you die instantly."