Art Collectors Challenge Denial of $650,000 Charitable Deduction

Two art collectors sued the IRS for disallowing their $650,000 charitable deduction and imposing more than $230,000 in additional income tax and penalties after determining that their donated artwork was only worth about $17,000.

Michael and Elyn Stubblefield filed a petition in the US Tax Court challenging the agency’s finding that the fair market value of their more than 400 fine art prints was actually equal to the roughly $17,000 original purchase price.

The Stubblefields say they purchased the art from Arader Galleries, whose founder said in an affidavit that they received the pieces at a “significant discount” because of ...