Interesting article in today’s L.A. Times:  Inflated Art Appraisals Cost U.S. Government Untold Millions, by Jason Felch & Doug Smith:

Each year, the IRS audits donations claimed on only a handful of the 100,000 or more tax returns that allow art donors to reap nearly $1 billion in tax write-offs. Half of the donations checked over the last 20 years had been appraised at nearly double their actual value.

These IRS reviews caught $183 million in exaggerated claims over the last two decades. But that probably represents a small fraction of the total problem, according to a more detailed 2006 study by the agency’s inspector general.

In recent years, the IRS has reduced even further the number of appraisals it checks, part of a broader decline in the number of tax returns audited. If that smaller sample is any indication, overvaluations appear to be getting worse.

(Hat Tip:  Al Golbert.)