Big-game hunting has fallen into disfavor in recent years, as wealthy hunters take expeditions to Africa and other far-away locations to hunt big game for sport. What we are referring to here is not hunting game for food, it is just for the “thrill of the kill.” I didn’t say “thrill of the chase,” as there is often no chase, as the game is rigged so that the animal is essentially trapped.
One such big game hunter is Paul Gardner. Gardner maintains a “trophy room” in his home, displaying many of his exploits. But after a while, Gardner began running out of space. Some of what he displayed was full body, but much of it was from the neck up, hung on walls. In these cases, there are a lot of “extra” parts that are not on display.
While on a Canadian excursion, Gardner struck up a conversation with another hunter about downsizing his collection to avoid overcrowding his trophy room.” His fellow hunter suggested a donation to the Dallas Ecological Foundation (DEF), an organization exempt from tax under section 501(a) and (c)(3).2. This hunter had himself donated specimens to DEF and told Gardner that “he knew all the ins and outs.” He subsequently put Gardner in touch with Richard W. Fullington, Ph.D., in Richardson, Texas. Following a conversation with Fullington, petitioner selected 177 items from his collection for donation to DEF. These items included no full body mounts and only three shoulder mounts The remaining 174 items consisted of: 58 skins and hides, 72 skulls (39 with horns or antlers), 15 horns, 15 antlers, six tails, five sets of hooves, two ears, and one set of tusks.
So now Gardner has a charitable contribution deduction. The issue is “How much of a deduction can he take?” The IRS allows a deduction for contribution of non-cash items. The deduction is normally limited to the fair market value or the donor’s basis, whichever is less. However, in this case, Gardner maintained that there was no fair market value as there is not a ready market for the items he donated. He elected to take replacement cost for these “unique” items. He engaged an appraiser to determine the replacement cost. The appraiser estimated what it would cost to replace each donated item. How much would Gardner have to spend to travel to the locations where the animal was killed, find and kill the animal, then ship it back to the United States and preserved. 177 times.
Based on this method Gardner took a charitable contribution deduction of $1,425,900. Not surprisingly, the IRS disagreed, allowing a deduction of $163,045. The case went to Tax Court. The IRS called Forrest Ketner, an expert in taxidermy and the appraisal of taxidermy items. Ketner stated that the donated collection consisted largely of “remnants and scraps” were not of museum quality, and were not even of record book status (which rates taxidermy items as to their quality).
Ketner further stated that there was a market for the items. Historically, taxidermists would buy, sell, swap, or trade these items as they were needed to complete projects, or to mount for their own collections. He characterized the market for such items now is “wide open,” with few if any barriers to entry, citing sales at auction houses and online auctions such as eBay.
The Tax Court agreed with the IRS, and Gardner got shot down with a $400,000 tax assessment.