• The Tax Court was asked recently to determine the value of ancient Biblical fragments donated to a public university by a collector. The collector donated to Duke University a number of fragments, including excerpts from the books of Genesis, Exodus, Leviticus, Deuteronomy, and Numbers. The collection included the oldest known version of Exodus 15 (the “song of the sea”). The collector claimed a charitable contribution deduction in the amount of $700,000 for the collection. The IRS audited the collector’s tax return, and asserted that the collection was not worth more than $25,000. The collector appealed, and the Tax Court concluded that both valuations were wrong since they had been based on the testimony of academic experts rather than antiquities dealers. The Court determined that the true value of the collection was $337,000, since this was the amount that an antiquities dealer offered to pay for it. The Court observed:

Generally, when a taxpayer donates property, other than money, to a qualified charitable organization, the taxpayer may deduct the fair market value of the property on the date of contribution …. Fair market value is the “price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.” The parties take diametrically opposite positions as to the fair market value of the collection. Valuation is an inexact science, and each case necessarily turns on its own particular facts. In most cases, each party presents one or more expert witnesses who argue a valuation formula that should be used, and testify to the misguided approach used by the opposing side’s expert …. In determining the fair market value of the collection, we must examine the market in which it would ordinarily be sold to the ultimate consumer …. The values determined by the expert witnesses range from a low of $25,000 … to a high of $700,000 …. Both [witnesses] are eminently qualified in the academic fields of ancient Biblical manuscripts and both have impeccable backgrounds. Both, however, in general, presented academic rather than commercial valuations. They are scholars, not professional appraisers of ancient documents. They convinced us of the authenticity of the collection, but not of the financial value of the collection. Accordingly, we reject their respective values placed on the collection …. On the other hand, we believe Professor Bikhazi’s offer of 1,000,000 Lebanese pounds (approximately $337,500) to purchase the collection was bona fide. Professor Bikhazi was a knowledgeable collector of antiquities and had the financial capability to fulfill his purchase commitment had his offer been accepted. We accept his offer of $337,500 as probative of the fair market value of the collection at the time of donation. Ashkar v. Commissioner, T.C. Memo. 1991-11 (1991).

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