                        T.C. Memo. 1997-176



                      UNITED STATES TAX COURT



         BENJAMIN H. AND DIANE E. ROBSON, Petitioners v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent

         LEROY C. AND HELEN E. TRNAVSKY, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket Nos. 23456-94, 23884-94.          Filed April 10, 1997.



     A. Lavar Taylor, for petitioners.

     Ronald M. Rosen, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     FAY, Judge:   Respondent determined deficiencies in

petitioners' Federal income taxes and penalties for 1990 through

1992 as follows:
                                - 2 -



Benjamin H. Robson
& Diane E. Robson
Docket No. 23456-94

                                                    Penalty

           Year              Deficiency          Sec. 6662(a)1

           1990                $17,033                $194
           1991                 20,629                 205
           1992                 18,035                 256


     1
      Respondent conceded that no amounts are due for penalties.



Leroy C. Trnavsky
& Helen E. Trnavsky
Docket No. 23884-94

                                                    Penalty

           Year              Deficiency          Sec. 6662(a)1

           1990                $13,685                $205
           1991                 11,776                 222
           1992                 13,789                 259


     1
      Respondent conceded that no amounts are due for penalties.



     All section references are to the Internal Revenue Code in

effect for the years in issue, and all Rule references are to the

Tax Court Rules of Practice and Procedure, unless otherwise

indicated.

     The cases have been consolidated for trial, briefing, and

opinion.    After concessions, the issues for decision are:
                                - 3 -

(1) The fair market value of various wild game animal trophy

mounts donated by petitioners; and (2) whether certain appraisal

fees are deductible.

                          FINDINGS OF FACT

     Some of the facts have been stipulated and are so found.

The stipulation of facts and the attached exhibits are incorpo-

rated herein by this reference.    Petitioners resided in Whittier,

California, at the time their petitions were filed.

     During the years at issue, Dr. Benjamin H. Robson (peti-

tioner Robson) and Dr. Leroy C. Trnavsky (petitioner Trnavsky)

were orthodontists.    Both petitioner Robson and petitioner

Trnavsky are accomplished hunters.      They have been on numerous

hunting trips to locations around the world and have acquired

various animal mounts over the course of many years of hunting.

Petitioners maintained the animal mounts in trophy rooms at their

respective homes.

     Over the 3-year period from 1990 to 1992, petitioner Robson

donated 30 animal specimens, including shoulder mounts and capes

and horns, to various charitable organizations.      Petitioner Rob-

son claimed deductions for charitable contributions of $53,600,

$67,100, and $61,300 for tax years 1990, 1991, and 1992, respec-

tively.   During this same period, petitioner Trnavsky donated 24

animal specimens to various charitable organizations and claimed

deductions for charitable contributions of $39,500, $34,400, and

$41,150 for tax years 1990, 1991, and 1992, respectively.
                               - 4 -

     At the time petitioners made their donations, under Cali-

fornia law it was illegal to sell any mounted animal specimens

similar to petitioners' that were taken under a hunting license.

Under Federal law, the interstate sale of any specimen sold in

violation of California law constituted a Federal offense.

However, despite these State and Federal restrictions, game

mounts were sold in California.    Further, while California has

strict prohibitions on the sale of mounted wildlife, many of the

Western States located near California, such as New Mexico,

Arizona, Montana, and Washington, have relatively few restric-

tions on the sale of mounted game trophies.

     On their Federal income tax returns, petitioners based the

value of their contributions on appraisals performed by R. Bruce

Duncan (Mr. Duncan) of Chicago Appraisers Association (CAA).

Petitioners Robson paid CAA $4,323.52, $3,710, and $4,166 in

1990, 1991, and 1992 and claimed deductions for these amounts

each year.   Petitioners Trnavsky also claimed deductions for

appraisal fees paid to CAA of $3,891.48, $3,140, and $3,333 for

1990, 1991, and 1992, respectively.    At trial, however,

Mr. Duncan was not called as a witness, and petitioners did not

rely on his appraisals at trial.    Rather, petitioners now rely on

the appraisal and testimony of Jack Perry (Mr. Perry), their

expert witness at trial.

     Respondent, in her notice of deficiency to petitioners

Robson, disallowed all charitable contribution deductions for
                               - 5 -

1990, 1991, and 1992 because she determined that petitioners

Robson had failed to demonstrate the fair market value of the

donated items.   For the same reason, respondent also disallowed

all charitable contribution deductions claimed by petitioners

Trnavsky for the years at issue.    Respondent concedes that

section 212 provides a deduction for reasonable appraisal fees

paid to value a charitable contribution.    However, respondent

amended her answers to the petitions and now contests as

unreasonable the amount of the appraisal fees deducted by

petitioners.

                              OPINION

Value of Charitable Contributions

     Section 170(a) provides a deduction for charitable contribu-

tions made to qualified entities during the taxable year.      The

regulations provide that, if property other than money is

donated, the amount of the contribution is the fair market value

of the property at the time of the contribution.    Sec. 1.170A-

1(c)(1), Income Tax Regs.   Section 1.170A-1(c)(2), Income Tax

Regs., defines "fair market value" as the price at which property

would change hands between a willing buyer and a willing seller,

neither being under a compulsion to buy or sell, and both having

reasonable knowledge of the relevant facts.

     The determination of fair market value of donated property

is a factual inquiry.   Estate of DeBie v. Commissioner, 56 T.C.
                                 - 6 -

876, 894 (1971).   Petitioners bear the burden of proof.   Rule

142(a); Welch v. Helvering, 290 U.S. 111 (1933).

     There is no disagreement that the donations were actually

made by petitioners.   There is significant disagreement over the

value of the donated game mounts.    Petitioners and respondent

presented expert testimony, and submitted expert reports,

concerning the value of these game mounts.    The ultimate findings

of the respective experts are set out in the attached appendix.

     Respondent primarily relies on the testimony of Alan Zanotti

(Mr. Zanotti).   Mr. Zanotti founded his company, the African

Import Company, in 1986, after he determined that there was a

large supply of game mounts within the United States available

for sale.   From the inception of his company to the present day,

Mr. Zanotti has sold between 3,500 and 4,000 game items.    He

indicated that there was an active market for the items involved

in this case.    Additionally, Mr. Zanotti has personally purchased

or sold many items similar to those donated by petitioners.

Mr. Zanotti believes that he would be able to assemble a collec-

tion comparable to petitioners' by purchasing items on the open

market.   In fact, Mr. Zanotti currently has in his inventory many

of the same type of game mounts as those donated by petitioners.

     Respondent submitted the report of another expert,

Herbert C. Curry (Mr. Curry).    Mr. Curry is a special agent with

the Fish and Wildlife Service.    Mr. Curry, a hunter and a collec-

tor of animal specimens, has extensive experience in investi-
                               - 7 -

gating violations of Federal and State wildlife laws.   Through

undercover work involved in his position with the Fish and

Wildlife Service, Mr. Curry has personally purchased and sold

game mounts, and he has been involved with the investigation of

other sales of wildlife.   Mr. Curry asserted that, despite his

department's efforts, an illegal market in game mounts existed in

California during the years at issue.

     Mr. Curry submitted a report in which he summarized the

price range at which various game mounts were sold in California.

Mr. Curry's report contained price ranges for those animal

specimens with which he had gained familiarity through the

performance of his duties as an agent.   His price ranges in most

cases were in line with the amounts contained in Mr. Zanotti's

report.

     Petitioners rely exclusively on the testimony of Mr. Perry.

Mr. Perry is on the board of the World Wildlife Museum,1 and he

has substantial experience in the field of taxidermy.

     Mr. Perry bases his appraisals on the replacement cost

methodology.   Replacement cost is the total cost the hunter

incurred in going on the hunt and related costs such as trophy

fees, taxidermy costs, and travel expenses.   If more than one


     1
      Mr. Perry admitted that he was motivated to perform
appraisals by factors other than the fees he charged. In fact,
he candidly stated that his "ulterior motive" in performing
appraisals was to encourage the donation of animal specimens to
museums.
                                - 8 -

specimen is harvested on a trip, the cost of the trip is prorated

over each specimen.   Mr. Perry then adjusts the values, based

upon factors such as the quality of the specimen and its rarity.

He believes that this is the only proper way to value animal

specimens, because he views each specimen as a unique object.

     Replacement cost is a relevant measure of value where the

property is unique, the market is limited, and there is no

evidence of comparable sales.    Estate of Palmer v. Commissioner,

839 F.2d 420, 424 (8th Cir. 1988), revg. 86 T.C. 66 (1986).    We

find, contrary to Mr. Perry's beliefs, that there is a market

throughout the United States for items comparable to those

donated by petitioners.

     Petitioners argue that there are no comparable sales,

because residents in California are prohibited from selling game

mounts.   We reject this contention.    Petitioners' argument, taken

to its logical conclusion, would result in their mounts' having

no value, as California residents could never sell them.

Mr. Curry testified, however, that prices for game mounts in

California are equivalent to prices in States that do not place

restrictions on sales.    Thus, the restrictions imposed by

California law do not materially affect the value of petitioners'

game mounts.   We therefore cannot accept Mr. Perry's valuations,

as petitioners have not demonstrated that their replacement cost
                               - 9 -

analysis has a correlation to fair market value in this case.2

See Epping v. Commissioner, T.C. Memo. 1992-279.

     We conclude that an active market exists throughout the

United States for substantially comparable items.   Petitioners

have not presented any evidence of comparable sales, relying

solely on Mr. Perry's valuations.   Consequently, petitioners have

failed to carry their burden of proving that the donated game

mounts are worth more than the amount established by respondent

at trial.   Thus, we conclude that, based on respondent's

appraisal, the animal specimens donated by petitioner Robson have

a fair market value of $29,100, and the specimens donated by

petitioner Trnavsky have a fair market value of $16,600.3

Deductibility of Appraisal Fees

     Respondent does not dispute that appraisal fees are deduct-

ible under section 212(3) but contends that the amount of fees

paid for Mr. Duncan's services is unreasonable, and, therefore,

     2
      Estate of Miller v. Commissioner, T.C. Memo. 1991-515,
affd. without published opinion 983 F.2d 232 (5th Cir. 1993), is
distinguishable. In Estate of Miller, the taxpayer donated
numerous animal mounts to the State of Louisiana and claimed
charitable contribution deductions. Replacement cost was
probative in the Estate of Miller case because the Court found
that no comparable items could be obtained in the market. Here,
respondent has successfully demonstrated that items comparable to
petitioners' did exist in the market.
     3
      The fair market value of petitioner Robson's charitable
contributions is $7,550, $12,125, and $9,425 for 1990, 1991, and
1992, respectively. The fair market value of petitioner
Trnavsky's charitable contributions is $5,750, $4,000, and $6,850
for 1990, 1991, and 1992, respectively. For a more detailed
listing of each donation, see appendix, infra.
                                  - 10 -

only a portion of the fees actually paid to CAA is deductible.

Because this issue was first raised by respondent in her amended

answers to the petitions, she carries the burden of proof.

     To be deductible under section 212, an expense must meet the

ordinary and necessary test.      Sec. 1.212-1(d), Income Tax Regs.

Thus, the expenses must be reasonable in amount and bear a rea-

sonable and proximate relation to the purpose for the expendi-

ture.    Id.   The determination of reasonableness is based on the

facts and circumstances.     See Palo Alto Town & Country Village,

Inc. v. Commissioner, 565 F.2d 1388 (9th Cir. 1977), affg. in

part and remanding T.C. Memo. 1973-223.

        Petitioner Robson claimed deductions of $4,323.52, $3,170,

and $4,166 for appraisal fees paid to CAA.     Petitioner Trnavsky

deducted $3,891.48, $3,140, and $3,333 for the appraisal fees

that he paid to CAA.     Respondent did not dispute that these fees

were actually paid to CAA.     Nor did respondent present any

evidence to indicate that CAA charged petitioners more than it

charged other taxpayers to perform museum appraisals.     Respondent

has not carried her burden to show that the fees paid were

unreasonable.     Accordingly, we find for petitioners on this

issue.

        Based on the foregoing,

                                       Decision will be entered

                                  under Rule 155.
                                     - 11 -

                                    APPENDIX

Dr. Benjamin Robson 1990:


 Item No.     Species       Type         Perry    Zanotti     Curry
    1-R     Roosevelt    Shoulder
            elk          mount          $5,500     $650        $800
            (wapiti)
    2-R     Barren       Shoulder
            ground       mount           4,500      900      600-800
            caribou
    3-R     Pronghorn    Shoulder
            antelope     mount           3,000      550      200-600
    4-R     Pronghorn    Shoulder
            antelope     mount           3,000      500      200-600
    5-R     Blesbok      Shoulder
                         mount           5,500      700         --
    6-R     Tsessebe     Shoulder
            (sassaby)    mount           3,750      700         --
    7-R     Gemsbok      Shoulder
            (oryx)       mount           4,700      900         --
    8-R     White        Shoulder
            tailed gnu   mount           4,500      800         --
            /black
            wildebeest
    9-R     Mule deer    Shoulder
                                          1
                         mount             -0-      500      200-800
   10-R     Mule deer    Shoulder
                         mount           4,000      650      200-800
   11-R     Mule deer    Shoulder
                         mount           4,000      700      200-800
            Total                       42,450     7,550

    1
     Petitioners' appraiser did not include a value for this mount in his
expert report.
                                   - 12 -


Dr. Benjamin Robson 1991:


Item No.     Species        Type       Perry   Zanotti    Curry
  12-R     Blacktail   Cape &
           deer        horns          $3,500     $225    $200-800

  13-R     Blacktail   Cape &
           deer        horns           3,500      250    200-800
  14-R     Barbary     Shoulder
           sheep       mount           4,500      850    400-800
           (aoudad)
  15-R     Steenbok    Shoulder
                       mount           2,750      475      --
  16-R     Bush        Shoulder
           duiker      mount           3,250      550      --
  17-R     Pronghorn   Shoulder
           antelope    mount           3,200      475    200-600
  18-R     Mule deer   Shoulder        3,500      650    200-800
                       mount
  19-R     Mule deer   Shoulder
                       mount           4,000      650    200-800
  20-R     Altai       Full skin
           argali      & horns
           sheep                      27,500   8,000     200-800
           Total                      55,700   12,125
                                   - 13 -


Dr. Benjamin Robson 1992:


Item No.     Species        Type       Perry    Zanotti     Curry
  21-R     Bighorn     Shoulder
           sheep       mount          $12,000   $3,000    $500-2,500
  22-R     Greater     Shoulder
           kudu        mount            4,700      950        --
  23-R     Greater     Shoulder
           kudu        mount            5,000      850        --
  24-R     Roosevelt   Shoulder
           elk         mount
           (wapiti)                     6,500      750       800
  25-R     Springbok   Shoulder
                       mount            3,250      600        --
  26-R     Gray        Shoulder
           duiker      mount            3,750      550        --
  27-R     Spanish     Shoulder
           stag        mount            8,500      825        --
  28-R     Corsican    Shoulder
           ram         mount
           (sheep)                      3,000      750        --
  29-R     Blacktail   Shoulder
           deer        mount            2,700      600     200-800
  30-R     Axis deer   Shoulder
                       mount            3,200      550       --
           Total                       52,600    9,425
                                   - 14 -


Dr. Leroy Trnavsky 1990:


 Item No.     Species      Type        Perry     Zanotti      Curry
    1-T     Common      Shoulder
            waterbuck   mount         $4,000       $700         --
    2-T     Barren      Shoulder
            ground      mount
            caribou                    5,000        900      $600-800
    3-T     Defassa     Shoulder
            waterbuck   mount          5,200        750         --
    4-T     Spanish     Tanned
            wild boar   cape           3,000        200         --
    5-T     Blesbok     Shoulder
                        mount          5,500        700         --
    6-T     Water       Shoulder
            Buffalo     Mount          5,000      1,600         --
    7-T     Mountain    Shoulder
                                                   1
            Goat        Mount          5,000        250       1,200
    8-T     Mule Deer   Shoulder
                        Mount          2,700        650      200-800
            Total                     35,400      5,750

     1
      Mr. Zanotti's report indicates that this mount was damaged.
Therefore, his valuation reflects an amount that is less than that for a
typical mountain goat mount in an undamaged condition.
                                  - 15 -


Dr. Leroy Trnavsky 1991:


Item No.     Species       Type       Perry   Zanotti    Curry
   9-T     Blacktail   Cape &
           deer        horns         $3,500    $225     $200-800
  10-T     Blacktail   Cape &
           deer        horns          3,500     250     200-800
  11-T     Blacktail   Shoulder
           deer        mount          2,700     600     200-800
  12-T     Barbary     Shoulder
           sheep       mount
           (aoudad)                   4,500     850     400-800
  13-T     Steenbok    Shoulder
                       mount          2,750     475       --
  14-T     Kirk's      Shoulder
           dik-dik     mount          3,700     475       --
  15-T     Pronghorn   Shoulder
           antelope    mount          3,000     475     200-600
  16-T     Mule deer   Shoulder
                       mount          3,500     650     200-800
           Total                     27,150    4,000
                                   - 16 -


Dr. Leroy Trnavsky 1992:


Item No.     Species       Type        Perry   Zanotti    Curry
   17-R    Pronghorn    Shoulder
           antelope     mount         $3,000    $500     $200-600
  18-R     Roosevelt    Shoulder
           elk          mount
           (wapiti)                    6,500     750       800
  19-R     Cape         Shoulder
           buffalo      mount          5,000   1,200       --
  20-R     Bison        Shoulder
                        mount          3,000   1,600      1,200
  21-R     Coues deer   Shoulder
                        mount          3,500     600     300-600
  22-R     Coues Deer   Shoulder
                        Mount          3,500     600     300-600
  23-R     Whitetail    Shoulder
           deer         mount          2,700     900       --
  24-R     Red lechwe   Shoulder
                        mount          3,200     700       --
           Total                      30,400    6,850
