Valuing Awards, Medals, Oscars and Grammys
While some honors are kept on the mantle, when digging through the family archival depository your donor may come across a long forgotten gem that, at one time in the past, announced the glory or major accomplishment of someone important to their memory. Of course, an Oscar or an Olympic medal would be irreplaceable, but anything can be enhanced in one sense or another. A gift to a favored non-profit will be reward enough to the devoted collector and it may prompt others to relinquish important but dust gathering memorabilia.
Most collectors are not motivated by tax deductions (see unrelated use, (1)). They want their collections and collectibles to survive and be seen and enjoyed. They are often most amenable to the prospect of the chosen non-profit selling the collection in a proper manner over a strategically determined period of time as opposed to having heirs just “let it all go” in an estate or rummage sale. In some cases they will facilitate a sale to convert the gross values (no loss to capital gains taxes) to a charitable remainder annuity (see, One of the most impressive, below)
Awards may have multiple sources of treasure. The granting, by the Queen of England, of the Honorary Officer of the British Empire (O.B.E.) is accompanied by a regal document signed by the Queen. As the queen ages (now age 88) her signature has become more collectible. There are very few items available, even of this nature, as they are treasured by the awardee or their heirs and after viewing past sales and current offerings, the document and the physical medal can bring as much as $2,000.
However, an award letter signed by the President of the United States requires more than careful consideration and research as from the time of Harry Truman going forward the use of the Autopen for most state sponsored documents signatures leaves the value in doubt. Awards accompanied by personal and handwritten notes are viewed very differently. Where value is assigned the nature or content of the accomplishment is an adjusting factor.
As to the Academy Awards, Grammys and Emmys, Since 1950, the Academy has required winners to sign an agreement stipulating that neither they nor their heirs will sell their statuettes without first offering to sell them back to the Academy for one dollar. With a refusal to sign this agreement the Academy keeps the statuette. But, despite the academy’s disapproval, Industry experts speculate that 150 Oscars have been sold since the first Academy Awards ceremony in 1929–half of which are likely gray-market sales involving post-1950 statuettes selling for as much as $1.5 million on the open market. Prices are lower for post-1950 Oscars because they can’t be sold again as easily, but any big-name Oscar has rarely been offered for less than $60,000.
Sotheby’s and Christie’s have so far avoided auctioning off newer Oscars, but both houses are doing a brisk business in older statuettes. In June 1999, Sotheby’s sold the 1939 Best Picture Oscar for Gone with the Wind to pop star Michael Jackson for a record price of $1.5 million. And, in recent years, Christie’s has sold four pre-1950 Oscars for a combined take of more than $1.5 million.
One of the most impressive unrelated use collectibles to be donated occurred in the summer of 2000. “An anonymous Caltech alum”, a passionate collector of classic sports cars, possessed several that had greatly appreciated in value. Concerned about a large portion of his estate being tied up in illiquid assets, he wanted to talk about using a charitable remainder annuity trust to convert the car into an income stream during his and his wife’s lifetime. Highly appreciated assets can be difficult to convert to liquid assets without losing most of the appreciation to capital gains taxes.
The alum chose a 1960 Aston Martin DB4GT Zagato as the car with which to fund the trust. Only nineteen of these British cars with Italian bodies were manufactured that year; just three are located in the United States. The alum had negotiated in 1969 to purchase the car for about $5,000. Once the trust was established, a buyer for the Aston Martin was identified, and the sale price was set in excess of one million two hundred thousand dollars. The alum acted as trustee until the car was sold and Caltech became the successor trustee, releasing him from further responsibility to administer the trust. The trust provides a lifetime annuity for Alum and his wife; upon termination, the remaining trust assets will be used to establish either a Caltech professorship or postdoctoral fellowship in any of the fields of electrical engineering, physics, mathematics or biology.
It is significant to note that certain tax rules apply to gifts of tangible personal property. The charitable income tax deduction was calculated on the donor’s cost basis as opposed to fair market value. The annuity payments were based upon the gross value of the asset funding the trust. All capital gains taxes were avoided. This is an excellent example of a win-win situation for Caltech and the benefactor by converting a non-productive asset into a lifetime income for the benefactor and his wife, removing it from their taxable estate, and creating a generous gift to the alum’s alma mater.
(1) IRS, 1.170A-4(b)(3) Unrelated use — In general. The term unrelated use means a use which is unrelated to the purpose or function constituting the basis of the charitable organization’s exemption under section 501 or, in the case of a contribution of property to a governmental unit, the use of such property by such unit for other than exclusively public purposes. For example, if a painting contributed to an educational institution is used by that organization for educational purposes by being placed in its library for display and study by art students, the use is not an unrelated use; but if the painting is sold and the proceeds used by the organization for educational purposes, the use of the property is an unrelated use. If furnishings contributed to a charitable organization are used by it in its offices and buildings in the course of carrying out its functions, the use of the property is not an unrelated use. If a set or collection of items of tangible personal property is contributed to a charitable organization or governmental unit, the use of the set or collection is not an unrelated use if the donee sells or otherwise disposes of only an insubstantial portion of the set or collection. The use by a trust of tangible personal property contributed to it for the benefit of a charitable organization is an unrelated use if the use by the trust is one which would have been unrelated if made by the charitable organization.