Is Picasso Coming to Portland?

On Monday, May 11, 2015 Pablo Picasso’s oil painting, “Women of Algiers (Version O)” sold for an astonishing, and record breaking, $179.4 million, inclusive of buyer’s premium, at Christy’s in New York.  This surpasses the paltry $142 million paid for the previous record holder “Three Studies of Lucien Freud,”  by Francis Bacon, which was loaned to the Portland Art Museum for public display over 15 weeks last year.  As with so many things in life, there is an interesting tax wrinkle here.

We wait with baited breath to see if the Portland Art Museum or some other Oregon museum announces a public viewing of this masterpiece.  Elaine Wynn’s decision to display Francis Bacon’s triptych for 105 days in Oregon is hardly surprising given the slightly over 8% sales tax rate at her home in Las Vegas, Nevada.  If the first use of the property occurred in Las Vegas, the tab would have been north of $11 million.  However, Nevada (like many states that have a sales tax) considers that tangible personal property like a painting) is not taxable in Nevada if the property is first used outside of Nevada.  Many states will say that there is a presumption that the first use occurs in their jurisdiction if the property comes into the state within 90 days after the sale takes place. So, if the first use occurs in Oregon, no sales tax may be incurred. In many respects, this is a win-win for the public and for the collector.  The viewing public gets to see some of the most expensive works of art sold at auction and the buyers get to take advantage of a sales tax break. 

Sales tax at the relatively standard rate of 8% on $179 million would be closer to $14.3 million in sales tax revenue.  Hopefully that’s enough to motivate the anonymous buyer to let it hang in Portland for a few months.

 

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