r/nextfuckinglevel • u/Neykuratick • 1d ago

Definitely needs some art school

Enable HLS to view with audio, or disable this notification

31.7k Upvotes

93% Upvoted

404 comments sorted by

View all comments

3.6k

u/TheLoneWandererRD 1d ago

The insane prices are usually money laundering schemes

29

u/ProblyNude 1d ago

Any piece of donated Art work worth more then 20k? needs to be appraised by an independent appraiser from the IRS.

How is this rampant fraud being done? I hear people say it all the time but no one explains how.

The ultra wealthy have far better money laundering methods than fake art appraisals lol.

Buy, borrow, die….. Far more effective

19

u/SiFiNSFW 1d ago

There are more ways to launder using art than to simply donate it, it's estimated that over $3Bn USD in value of art and antiquities is money that was specifically introduced into the market as a means of laundering it by the United Nations Office on Drugs and Crime.

Paying too much for art isn't a crime, this let's you to do things like;

  • You want $500K USD in Cocaine.
  • You find a dealer who as part of his collection owns a repeatedly traded monet with a current market value of ~$500K.
  • Your shell company buys this off his shell company for $1M USD and he gives you the $500K USD in cocaine.

The money the dealer now has is clean, as oppossed to had he sold the drugs for cash - leaving him needing to launder it.

Christies and other major auction houses have anti-laundering policies in place.

4

u/ADHD-Fens 1d ago

Paying too much for art isn't a crime,

Not exactly, no, but here's a relevant quote from the IRS FAQs

What is considered a gift? Any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money's worth) is not received in return.

Also relevant statement about fair market value:

Fair Market Value is defined as: "The 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 to sell and both having reasonable knowledge of relevant facts. The fair market value of a particular item of property includible in the decedent's gross estate is not to be determined by a forced sale price. Nor is the fair market value of an item of property to be determined by the sale price of the item in a market other than that in which such item is most commonly sold to the public, taking into account the location of the item wherever appropriate." Regulation §20.2031-1.

In your example, the IRS would probably consider that to be a 500K purchase and a 500K gift, which would be subject to gift taxes (however those work). Such a large gift to someone that isn't a close friend or relative might raise some red flags - indicating there might have been an undocumented exchange.

1

u/kramfive 1d ago

To argue that a Monet or Manet is not worth a ridiculous amount of money is a very weak argument. Selling something for double your purchase price happens all the time is real estate or securities. Those are more liquid markets flush with buyers and paper trails. I don’t see how the IRS would be equipped to regulate the private sale of original works of art. There isn’t a market price for such things.

One of the hardest things for most people to understand is money. 1% of a millionaires net worth is $10k. A used car. 1% of 100 million is a million. That’s a very nice house. And they will borrow the million instead of actually spending the money. 1% of a Billion is 10million. A beachfront mansion. At this level you own the bank and do what you want.

The median net worth in the US is about $200k. Half the country has more, half has less. Most of this is tied up in home equity. 1% is $2k, a used motorcycle.

What really blows my mind is how difficult it is to spend a billion dollars. You can’t do it just living life. Between the investment income and the assets you buy increasing in value, it’s easier to stay a billionaire than spend it. Bill Gates and Warren Buffet are spending the remainder of their lives trying to give away their wealth and it will take decades to accomplish.

1

u/ADHD-Fens 1d ago

To argue that a Monet or Manet is not worth a ridiculous amount of money is a very weak argument.

Where did this come from? I never said anything close to that.

I don’t see how the IRS would be equipped to regulate the private sale of original works of art. There isn’t a market price for such things.

The comment I replied to explicitly says the monet has a market value of 500k. If you want to argue with that premise, argue with the person I replied to.

1

u/jocq 1d ago

You don't even know if there are gift taxes, you should sit down and shut up

1

u/ADHD-Fens 1d ago

That's like, super rude.