                      T.C. Memo. 1998-132



                    UNITED STATES TAX COURT



        BRUCE AND JEANNE KORSON, ET AL.1, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



    Docket Nos. 18976-96,                     Filed April 6, 1998.
                18977-96,
                18978-96.



         R determined deficiencies in income tax on account
    of R's revaluation of certain numismatic materials
    contributed to charity; Ps claim an overpayment on
    account of their own, subsequent revaluation.
         Held: Deficiencies sustained in part. Held,
    further, no overpayments made.



    Sidney D. Rosoff and Paula G.A. Ryan, for petitioners.

    Mark A. Ericson and Laurence D. Ziegler, for respondent.


1
     The following cases are consolidated for trial, briefing,
and opinion: Armin B. Allen, docket No. 18977-96; John H. Allen
and Susan N. Allen, docket No. 18978-96.
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               MEMORANDUM FINDINGS OF FACT AND OPINION

     HALPERN, Judge:    Respondent determined deficiencies in

income tax and additions to tax as follows:

                                                     Additions to Tax
                                Year    Deficiency    Sec. 6651(a)(1)

Bruce and Jean Korson           1991     $10,000          $396
Armin B. Allen                  1991       5,484           --
John H. and Susan N. Allen      1991       9,415           --

Petitioners have assigned error to respondent’s determinations

and, in addition, have claimed overpayments in tax.

     Petitioners Bruce and Jeanne Korson concede the section

6651(a)(1) addition to tax, and the only other issue for

decision, common to all petitioners, is the fair market value of

certain property contributed to charity.

     Unless otherwise indicated, all section references are to

the Internal Revenue Code in effect for the year in issue, and

all Rule references are to the Tax Court Rules of Practice and

Procedure.

                          FINDINGS OF FACT

Introduction

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

The stipulation of facts, with accompanying exhibits, is

incorporated herein by this reference.     At the time the petitions

in these cases were filed, petitioners Bruce and Jeanne Korson

resided in Oyster Bay Cove, New York, petitioner Armin B. Allen
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resided in Newport, Rhode Island, and petitioners John H. and

Susan N. Allen resided in New York, New York.

Virgil M. Brand

     Virgil M. Brand (Virgil Brand) was a coin collector who,

during the late 19th and early 20th century, amassed the largest

and one of the most significant private coin collections in the

United States (the coin collection).   Virgil Brand died intestate

in 1926, and his brothers, Armin Brand (Armin) and Horace Brand

(Horace) succeeded to his estate.   Armin and Horace each received

half of Virgil Brand's original bound coin ledgers (the coin

ledgers), which, to a large extent, recorded Virgil Brand's coin

acquisitions.   Additionally, each received a reverse (white on

black) photocopy of reduced size of the coin ledgers received by

the other brother (collectively, the photocopy).   Armin also

inherited certain papers relating to the Chicago Coin Co. (the

Chicago Coin Co. papers), a company that was either owned or co-

owned by Virgil Brand and that was engaged in the coin business,

and certain coin envelopes.

Jane Brand Allen

     Armin died in 1946.   His only child, Jane Brand Allen (Jane

Allen), inherited Armin's half of the coin ledgers and photocopy,

the Chicago Coin Co. papers, the coin envelopes, papers relating

to Virgil Brand's estate (the Virgil Brand estate papers) along

with papers relating in part to Armin's dispersal of some of the
                               - 4 -


coin collection (Armin's papers).   Jane Allen died testate in

1981 and her children, petitioners Jeanne Korson, Armin B. Allen,

and John H. Allen (collectively, the children), received those

ledgers, items, and papers by devise.   The children also received

papers that their mother compiled, some of which relate to her

dispersal of some of the coin collection (the Jane Allen papers).

Each of the children was a co-executor of Jane Allen's estate

(the estate).   A Federal estate tax return was filed on behalf of

the estate and each of the children signed that tax return.    That

return did not include Armin's half of the coin ledgers, Armin's

half of the photocopy, the Chicago Coin Co. papers, the coin

envelopes, the Virgil Brand estate papers, Armin's papers, or the

Jane Allen papers as assets of the estate because none of the

children believed that those items had any market value.

     Jane Allen's estate also included part of the coin

collection.   The executors of the estate devised a marketing plan

in an attempt to maximize the value of those coins.   They decided

to promote Virgil Brand's name in order to develop his identity

as a unique numismatic collector and to publicize his life as

well as the coin collection.   To that end, the executors arranged

to have a book published in 1983 that profiled Virgil Brand and

the coin collection.
                                - 5 -


The Brand Archive

     On August 13, 1983, petitioners bought Horace's half of the

coin ledgers, Horace's half of the photocopy, and a reverse

photocopy of the Chicago Coin Co. papers at a public auction for

$22,550.   The coin ledgers, the photocopy, the Chicago Coin Co.

papers, the Virgil Brand estate papers, Armin's papers, the Jane

Allen papers, and various coin envelopes collectively constitute

the Brand Archive (Brand Archive).

The Contribution

     Petitioners contributed the Brand Archive (the contribution)

to the American Numismatic Society on September 3, 1991 (the

contribution date).    On their respective 1991 Federal income tax

returns, each of the children claimed a $58,333.33 charitable

contribution deduction on account of the contribution which

represented one-third of the claimed value of the Brand Archives

($175,000).   Respondent determined that the fair market value of

the Brand Archive on the contribution date did not exceed $75,000

and disallowed each of the claimed deductions to the extent that

it exceeded $25,000.

Ultimate Finding of Fact

     On the contribution date, the fair market value of the Brand

Archive was $142,650.
                                 - 6 -


                                OPINION

I.    Introduction

       These consolidated cases involve income tax deductions

claimed on account of charitable contributions.      The particular

question before us is the value of certain numismatic materials

(the Brand Archive) contributed to the American Numismatic

Society on September 3, 1991.     Petitioners claim that the fair

market value of the Brand Archive on the contribution date was

$605,000, while respondent claims that its fair market value did

not exceed $75,000.    Value is a question of fact, and petitioners

bear the burden of proof.     Rule 142(a).   We have found that the

fair market value of the Brand Archive on the contribution date

was $142,650.

II.    Code and Regulations

       Section 170(a)(1) allows a deduction for any contribution

made to a qualified donee organization.      It is undisputed that

the American Numismatic Society is a qualified donee

organization, and the only question before the Court is the

amount of the contribution on the contribution date.      The parties

agree that each of the children was entitled to deduct one-third

of the fair market value of the Brand Archive on the contribution

date.    With exceptions not here relevant, if a charitable

contribution is made in property other than money, 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.
                                  - 7 -


“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 sell and both having

reasonable knowledge of relevant facts.”       Sec. 1.170A-1(c)(2),

Income Tax Regs.

III.    Value of the Contribution

       A.   Introduction

       To support their respective valuations, the parties rely

principally on the testimony of expert witnesses.       We have

considered that testimony and, in part, have relied on it in

making our finding.

       B.   Petitioners’ Expert

             1.   Gabriel Austin’s Testimony

       Gabriel Austin (Austin), petitioners’ expert witness, is an

appraiser and cataloguer who was accepted by the Court as an

expert in the valuation of archives, books, and manuscripts.

Austin prepared a written report for submission to the Court as

his expert testimony (the Austin report).       In the Austin report,

Austin expresses separate opinions as to the values on the

contribution date of (1) the coin ledgers, (2) the Chicago Coin

Co. papers, (3) the Virgil Brand estate papers, (4) Armin's

papers, and (5) the Jane Allen papers.     Based on Austin’s failure

to comply fully with the standards of Rule 143(f) with respect to

expert witness reports, those portions of the Austin report

expressing opinions as to the values of the Virgil Brand estate
                                 - 8 -


papers, Armin's papers, and the Jane Allen papers were excluded

from evidence.   The remaining portion of the Austin report was

received into evidence as Austin’s expert testimony.   Austin is

of the opinion that, on the contribution date, the coin ledgers

and the Chicago Coin Co. papers had fair market values of

$450,000 and $20,000, respectively.

     To value the coin ledgers and the Chicago Coin Co. papers,

Austin looked for sales of comparable items to use in estimating

both items' fair market value.    Austin found two sales at auction

of items that he asserts were only “quasi-comparables”.   Austin

prefers not to rely on auction sales to value archival material

because he believes auction prices are not necessarily good

indicators of value.   He prefers to rely instead on private

sales, but, since records of such sales were not available to

him, and due to the uniqueness of the Brand Archives, he could

not do so.

     Austin finds that the most useful public record in arriving

at a value of the Brand Archive is the price paid by petitioners

for Horace’s half of the coin ledgers and accompanying half of

the photocopy.   Petitioners purchased those items at public

auction in 1983 for $22,550.   Austin believes that the amount

that would have been realized at that auction had the lot

contained the full set of coin ledgers would have been "triple".

He also believes that $22,550 was an insufficient representation

of a fair market value for half of the coin ledgers because of
                                - 9 -


(1) the inadequacy of the auction process in general, (2) the

inadequacy of the particular auction at which petitioners bought

Horace's half of the coin ledgers, and because (3) the nature of

the Brand Archive was not fully understood in 1983.      He believes

that, in 1983, the full set of the coin ledgers had a

“conservative” value of $150,000.   To reach his opinion, Austin

testified:   “In the rapidly rising, serious numismatic market

from 1983 to 1991 (and later), an extrapolation of three times

the 1983 value is highly conservative.   All other parts of the

archive aside, I believe a 1991 figure of $450,000 for the

ledgers alone to be a fair market value.”

     As to the Chicago Coin Co. papers, Austin based his

valuation on a comparison to the New Netherlands Coin Co.

auctioneer's books, which were sold at auction in 1991 for

$20,900.

           2.   Analysis of Gabriel Austin’s Testimony

     We do not find Gabriel Austin’s testimony helpful in

determining the fair market value of the coin ledgers on the

contribution date.   Austin failed to convince us that the value

of the coin ledgers was $450,000.

     Austin’s testimony was vague and he did not make it clear to

us how he arrived at many of the figures he used in the various

stages of his analysis.   Where we do understand his analysis, it

is, for the most part, unpersuasive.    Austin starts with $22,550,

the price petitioners paid in 1983 for Horace’s half of the coin
                              - 10 -


ledgers with the accompanying half of the photocopy and a

photocopy of the Chicago Coin Co. papers.   He attributes that

price to Horace’s half of the coin ledgers alone, without

accounting for the value, if any, of the two photocopies that

accompanied Horace’s half of the coin ledgers.   To find the value

of the complete set of coin ledgers, he tripled the $22,550 and

somehow arrived at $75,000.   He doubles that figure to account

for the inadequacy of the auction process in general, the unknown

importance of the coin ledgers, and the inadequacy of the

specific auction at which petitioners bought Horace's half of the

coin ledgers.   We can understand (but do not necessarily agree

with) his adjustment for the general and specific alleged

inadequacies of the auction, see, e.g., Berry Petroleum Co. &

Subs. v. Commissioner, 104 T.C. 584, 637-638 (1995) (“prices

obtained at forced sales, at public auctions, or in restricted

markets may not be the best criteria of value”), but do not

understand his adjustment for the unknown importance of the coin

ledgers.   Reasonable knowledge of relevant facts is part of the

applicable definition of fair market value.   See sec. 1.170A-

1(c)(2), Income Tax Regs.   If Austin’s adjustment to take account

of the unknown importance of the coin ledgers simply reflects the

fact that the coin ledgers might turn out to be more valuable

once their importance became known, we do not see how it affects

their fair market value before their importance became known.

Austin did not apportion the relative influence of the concerns
                              - 11 -


that gave rise to his adjustment leading to the $150,000 figure,

nor can we.   Finally, Austin multiplied the $150,000 figure by

three to arrive at a 1991 value of $450,000.   During his oral

testimony, he explained his “highly conservative” “extrapolation”

of the value of the coin ledgers from 1983 to 1991 as follows:

          I’m not sure if I’ve made that point clear, the
     calculated figure that I worked up to the $75,000. At
     that point, having arrived at the 150, well then you
     know that I took the three times figure, which I took
     to tell the truth without very much investigating, but
     it was from what I understood in the -- the talk that
     had been going on, the talk for a settlement in the
     meeting and so on, it was a figure already on the
     table. Well, I didn’t want to start that up again.

He further describes the appreciation factor (3x), which he

asserts he "borrowed" from respondent's expert, as “not really a

very solid one” and states that, although it is a figure he

“could argue with” (he does not tell us whether he would argue up

or down), he accepted it because of time pressure and “not to

argue over every comma”.

     Opinion testimony of experts is useful to the trier of fact

precisely because it provides the informed and unbiased opinion

of a qualified expert arriving at a reasoned conclusion.   It

would be absurd to rely on a purported expert’s opinion that was,

with respect to important conclusions, arrived at “without very

much investigation”, considered by the expert himself as “not

really * * * solid”, and merely a concession so as “not to argue

over every comma”.   Therefore, we find major portions of Austin’s

testimony as to the value of the coin ledgers unpersuasive.     He
                                 - 12 -


has failed to aid us in determining the value of the coin ledgers

on the contribution date, and we accord his testimony no weight.

     Austin’s total analysis leading to his opinion that the

Chicago Coin Co. papers were worth $20,000 in September 1991 is

as follows:      “These ledgers are comparable in value to the New

Netherlands Coin Company auctioneer's books; they differ in being

a record of an earlier period, and a record of the activities of

a private company.”     We fail to see the alleged correlation

between the amount realized for the auctioneer's books and the

fair market value of the Chicago Coin Co. papers and therefore

attach little weight to Austin’s opinion with respect to the

value of the Chicago Coin Co. papers.

     C.    Respondent’s Expert

            1.    Michael F. Robinson’s Testimony

     Michael F. Robinson (Robinson), respondent’s expert witness

is an appraiser and dealer in manuscripts, autographs, and rare

books, who was accepted by the Court as an expert in the

valuation of manuscripts and rare books.      Robinson prepared a

written report that was received into evidence as his expert

testimony (the Robinson report).      Robinson is of the opinion that

the value of the Brand Archive on the contribution date was

$75,000.    Robinson explains that $75,000 is (1) three times the

price paid for Horace’s half of both the coin ledgers and the

photocopy ($22,550 x 3 = $67,650) plus (2) $7,350 for “the

remaining papers”.
                               - 13 -


     We need discuss only a few significant aspects of Robinson’s

testimony.    Robinson started with the price paid for Horace’s

half of both the coin ledgers and the photocopy (the Horace

ledger set), determined that much of the value of the Brand

Archive rests in its content, and took into account that the

price for book inventories with substantial manuscript

annotations approximately tripled between 1984 and 1993.      By his

oral testimony, Robinson made clear that, although he believed

that the assembled value of the coin ledgers was more than the

value of either half, he did not believe that the assembled value

was double (or more than double) the value of either half.

Indeed, he testified that the value was “very far” from double.

Taking into account the photocopy, he explained that conclusion

as follows:

          What you have here, I think, is two copies of a
     text, two complete copies of the text, and you put them
     together, and instead of having--and you still have two
     complete copies of the text, but one is in the large
     volumes and one is in the small photocopies.

          2.    Analysis of Michael F. Robinson’s Testimony

     Robinson’s testimony was also vague.   He did not explain the

weight accorded to the components of his analysis that led him to

triple the value of the Horace ledger set to arrive at his

valuation of $67,650 for the coin ledgers and photocopy in 1991.

We suspect that the tripling reflects primarily, if not

exclusively, the data he had with respect to the appreciation in

the price of book inventories between 1984 and 1993.   We believe
                              - 14 -


that he was wrong in concluding that the assembled value of the

coin ledgers could not have been double the value of either half.

Assuming that the value of the Brand Archive is attributable

principally to its content, as Robinson asserted, there were at

least two sets of the information constituting the content of the

coin ledgers in existence in 1983.     Both the purchased set (the

Horace ledger set) and the set petitioners already owned before

the purchase were “mixed” sets, each being one-half of the

original ledgers and photocopies.    Nevertheless, petitioners paid

$22,550 for the Horace ledger set, and Robinson accepts that

value as being its fair market value in 1983.    If a third party

had purchased the Horace ledger set for $22,550 at a public

auction, we believe that the fair market value of petitioners'

set immediately after the auction would also have been $22,550,

based on the recent sales price of a comparable item.    Thus

petitioners had two equivalent mixed sets of information that,

together, by the evidence available to us, and based on

Robinson’s analysis, could be worth double.

     D.   Discussion

     In 1981, petitioners believed that Armin’s half of the coin

ledgers and photocopy, the Chicago Coin Co. papers, the Virgil

Brand estate papers, Armin's papers, and the Jane Allen papers

had no market value and, on that basis, they did not report them

on the estate tax return.   Two years later, they paid $22,550 for

the Horace ledger set.   We accept the implicit conclusion of the
                               - 15 -


experts that $22,550 reflects the fair market value of that

purchase.    For reasons we have explained, we conclude that the

value in 1983 of the complete set of coin ledgers and the

photocopy was twice the then value of the Horace set, viz,

$45,100.    We agree with what we take to be Robinson’s conclusion

that that value should be tripled to determine the value of the

sets on the contribution date, viz, $135,300.    To that, we add

$7,350, Robinson’s value for the “remaining papers”, to arrive at

$142,650 as the total fair market value of the contribution on

the contribution date.    Petitioners argue that we must take into

account the disability of the auction sale of the Horace set and

any increase in value that resulted from the enhancement of

Virgil Brand’s reputation.    That may be so, but petitioners have

failed to provide us with any basis to quantify such factors.      We

find that the value of the contribution on the contribution date

was $142,650.

III.   Conclusion

       We redetermine deficiencies in tax based on our finding as

to the value of the contribution on the contribution date; we

determine no overpayments.


                                          Decisions will be entered

                                     under Rule 155.
