## Facts

- In 1969, George O. Doherty bought an oil painting on rough canvas for $10,000, believing it was by Western artist Charles M. Russell.
- The painting depicted cowboys and Native Americans in a Western scene, a subject commonly associated with Russell’s work.
- In 1982 and 1983, George and Emelia A. Doherty donated the painting to the Charles M. Russell Museum in Great Falls, Montana.
- On their 1982 and 1983 federal income tax returns, the Dohertys claimed charitable contribution deductions based on an asserted fair market value of $350,000.
- The Commissioner issued a notice of deficiency disallowing most of the claimed deduction, asserting the painting was a forgery with only nominal value (about $100, if anything).
- The Dohertys petitioned the United States Tax Court to redetermine the deficiencies.
- At trial, the Dohertys relied on testimony from Ray W. Steele, a former curator/director of the museum, who opined the painting was authentic and valued it at about $200,000 at the time of donation.
- The Commissioner relied on testimony from Ginger K. Renner, an art historian and archivist with extensive experience authenticating Russell works, who opined the painting was not authentic based on stylistic and comparative analysis.
- The parties presented information on sales of authenticated Russell paintings as market comparables, with prices varying widely depending on quality and characteristics.

## Issues

1. What was the fair market value of the donated painting for purposes of the charitable contribution deduction under I.R.C. § 170?
2. Did the Dohertys carry their burden of proving the Commissioner’s determination was incorrect by establishing the painting’s authenticity and supporting the claimed valuation?

## Decision

- The Tax Court held the Dohertys failed to prove the painting was an authentic Charles M. Russell work.
- Because authenticity was not established, the court rejected the Dohertys’ high valuation premise and substantially reduced the allowable charitable contribution deduction.
- The court largely sustained the Commissioner’s deficiency determination, subject to the court’s valuation findings.

## Legal Principles

- For I.R.C. § 170, the charitable contribution of property is generally measured by the property’s fair market value at the time of contribution (willing buyer/willing seller, neither compelled, both informed).
- Deductions are a matter of legislative grace; the taxpayer bears the burden to substantiate entitlement and amount and to show the Commissioner’s determination is erroneous.
- Valuation is a factual question; the Tax Court may weigh competing expert opinions, accept or reject them in whole or in part, and determine value from the entire record.
- Comparable sales of high-value authenticated works are not persuasive where the taxpayer does not prove the donated work is authentic.

## Conclusion

The Tax Court significantly reduced the Dohertys’ charitable deduction because they did not meet their burden to prove the donated painting’s authenticity and corresponding fair market value, thereby leaving the Commissioner’s deficiency determination largely in place.


Doherty v. Commissioner, 63 T.C.M. (CCH) 2112 (1992)