Wednesday, April 15, 2015

Tax Season

I hadn't been to the Jordan Schnitzer Museum for a while so I stopped by yesterday to see what was new. I was surprised to see this photo prominently displayed near the entrance to the second floor galleries.

Phantom, 2013, Peter Lik

That's right. It was none other than Peter Lik's photograph Phantom, the very one which had sold for a record $6.5 million last fall and sent the fine art photo world into a tizzy. Despite the public outcry, his photo had made it into a museum after all.

I gotta admit the print looked pretty nice. It was fairly large, about 5 feet wide by 3 feet high, mounted regally behind glass in a gigantic black frame. The print was on metallic paper with bright spaceship tones, signed at the bottom Peter Lik 1/1.  Nearby was a label with a brief paragraph by Lik describing how he made the record-setting photo. One minute his Native American guide was flinging sacred dust into a light well, next thing he knew the Guinness Book was calling. Aw shucks, it was nothing. Just f/8 and be there. Plus a lot of Photoshop.

Phantom hung on the wall between two other Lik photos, neither of which I'd seen before. They were similarly printed and framed, and each one signed the same: Peter Lik 1/1. Reading the museum captions I realized they were Eternal Moods and Illusion, the two photos that had sold alongside Phantom to the same buyer (for $1.1 million and $2.4 million, respectively). I was looking at the record-busting trifecta. Ah, I thought, so that's what ten million bucks of pictures looks like. 

But what the heck were they doing in Eugene? 

Three Studies of Lucian Freud, 1969, Francis Bacon

Avoiding taxes, that's what. I'm no tax expert and this article explains the loophole better than I can. The upshot is that Oregon is one of a few states which can lower the tax burden due on recently purchased art. Display it in a public museum here for three months and the taxes are reduced. After that it's yours to do as you wish in your home state. For expensive art like Lik's, this can result in significant savings for collectors. The other states are New Hampshire, Alaska, Delaware, and Montana, none of which has a major art museum. So Oregon it is.

It's the same loophole that brought Francis Bacon's triptych Three Studies of Lucian Freud to the Portland Art Museum after it sold for a record $142 million in 2013. The paintings were there for three months and attracted huge crowds. I drove up to Portland with my parents to see them. Special trip. Special bullet proof glass case. As for the art? I don't know. I guess they looked ok. Showed me what a hundred million bucks of pictures looks like.

The Bacon and Lik loans are just two examples. We see all sorts of stuff in Oregon that has no business being shown here. Bacon should've exhibited in New York or Paris, not Portland. Eugene gets its fair share too. In fact the JSMA has an entire wing devoted to tax-avoidance. Of course it's not called that. The official name is Masterworks On Loan, but it amounts to the same thing. Expensive art gets hauled here from around the world for three month tax sheltered stints. Masterworks On Loan is where the Peter Lik photos were hanging yesterday, alongside Albers, Lichtenstein, Richter, Frankenthaller, Modigliano, and whatever else sold at auction last Fall. If you live in a major city you might laugh. But hey, we'll take what we can get, and it's often pretty good.

JSMA Tax Shelter (Wikimedia Commons)

It was kind of fun to see the Lik photos in a museum, even if it's just temporary. Those photos caused such a shit storm last year. Remember? They're not art! They're not investment grade! He's a snake oil salesman! Boo hoo, he's not in our club! How dare an outsider subvert the auction houses!  

Yes, Lik cleverly manipulated the market to inflate speculative value, then convinced rich collectors to invest. In other words he did exactly what every successful art dealer does. But he did it without an art pedigree, and that pissed people off. I love it when art snobs get their tighty-whities in a bunch, so for me the Lik sale was a golden moment. And now the photos were in a museum. This was even better! Artforum and ARTnews just threw up a little in their mouths. I'm guessing the show will not get a write up there, nor in the local Eugene press because very few people here pay attention to photography. (*4/16 addendum: Bob Keefer wrote about the show today.)

I'm not defending the content of Lik's photos. I think all three at the JSMA are boring. But a lot of boring stuff winds up in museums. Why not these? Curatorial judgement is not always about aesthetic merit. It's also about careers and taxes and influence and all sorts of factors. And if a lousy photo in a museum upsets people and makes them question their preconceptions, isn't that a good thing? Isn't that what art is supposed to do? 

But don't listen to me. Check it out firsthand. Attention photographers (and/or accountants) in the Willamette Valley. The Lik photos are on display at the JSMA through June. Come see for yourself what ten million bucks of tax-free pictures looks like.


Stan B. said...

Is Mr. Lik giving any (free) instructional workshops over there on how to become a better photographer/entrepreneur/tax evader? Somehow, for some reason, he doesn't quite strike me as the type that gives back to the community.

PE Preston said...

Use taxes are notoriously grossly under-reported and often go unpaid even when due. People order stuff off the interwebs and, if the out-of-state vendor does not collect the tax up front, the buyers just ignore their duty to report and pay the use tax. We're talking much more dollars than the relative chump change involved in these art sales. At least the art buyers are aware of the tax and are avoiding it legally based on the law of their state of domicile. California could ditch the first use rule if they wanted to, but there's bigger dollars to be had chasing down the vendors to make them liable for collecting and remitting sales taxes.

As for us here in Oregon, so long as those f-ers from over in Vancouver continue to make me compete for parking spaces at the Costco and Ikea just so they can cheat their home state of Washington out of sale tax revenue, I'm not going to get worked up about a California tax avoidance show at PAM.