From: Clapp, Ada [mar to

From: Clapp, Ada [mar to Sent: Tuesday, November 13, 2012 2:54 PM To: Eileen Alexanderson Subject: Art rentals Hi—I thought you might be interested in this information. My colleague belongs to the same discussion group as I do. I could not go to the lunch today (too backlogged) but he went and filled me in on an interesting discussion. Our guest today (we don't usually have one) was Heather Gray from Sotheby's. She noted that Sotheby's has been getting several calls per week asking about how to price the fair market rent for fine art. What is more interesting is that the IRS recently called Sotheby's to ask the same question. Sotheby's had no real insight to offer on the question. They noted that there is a small rental market in the U.K. where fine art Is rented for about 1.1/2% of its fair market value but apparently the rental circumstances differ from what we typically see. She also noted that museums will rent works to each other but at rental value that would not apply to individuals. Heather said that the IRS currently has a "project" in the works to adopt a uniform IRS position on the issue. The IRS Is apparently considering taking the position that the annual fair market rent for a work of fine art should be about 2-3% of the work's fair market value—but that for highly valuable works (this was not quantified), the percentage should be higher. The rental price would not include insurance, shipping or storage of the work. I am assuming Leon pays nowhere near that much to rent art from the trusts, so this is not great news (even if it is just hearsay at the moment). Ada Clapp Managing Director, Wealth Strategist U.S. Trust Bank of America Private Wealth Management 114 West 47th Street New York, New York 10036 Phone: 212.852.2844 Fax: 98.11 Email: IRS Circular 230 Disclosure: Pursuant to IRS regulations, we inform you that any tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used by any person or entity for the purpose of (i) avoiding tax related penalties imposed by any governmental tax authority or agency, or (ii) promoting, marketing or recommending to another party any transaction or matter discussed herein. We advise you to consult with an independent tax advisor on your particular tax circumstances. This message w/attaclunents (message) is intended solely for the use of the intended recipient(s) and may contain information that is privileged, confidential or proprietary. If you are not an intended recipient, please notify the sender, and then please delete and destroy all copies and attachments, and be advised that any review or dissemination of, or the taking of any action in reliance on, the information contained in or attached to this message is prohibited. Unless specifically indicated, this message is not an offer to sell or a solicitation of any investment products or other financial product or service, an official confirmation of any transaction, or an official statement of Sender. Subject to applicable law, Sender may intercept, monitor, review and retain e-communications (EC) traveling 2 EFTA00594002