Picasso may pose $365,000 tax dilemma for Wexford raffle winner
By Rachel Weaver
Published: Thursday, Dec. 19, 2013, 11:33 p.m.
The winner of a Picasso likely will pay more for it than the cost of his $140 raffle ticket.
Jeffrey Gonano, 25, whose family is from Pine, won an international drawing for a million-dollar Picasso on Wednesday. Contest rules stipulate he's responsible for any taxes on the piece, which could cost about $365,000.
“Even if you have it, you have to ask if you want to spend that much to have a small painting on your wall,” said Ken McCrory, an accountant and principal with ParenteBeard, Downtown.
Gonano, who works as a project manager for the family business, Preferred Fire Protection Inc. in Ross, says he's exploring his options and is considering loaning the piece to a local museum.
“It would be nice to keep it in Pittsburgh,” he said.
Gonano said he's still figuring out how he might pay for the taxes and is working on securing insurance for the piece. He asked contest organizers to hold off on shipping it to him until he has all those details in order.
Gonano bought one of 50,000 tickets put up for sale online at 100 euros each to raise funds for the International Association to Save Tyre, a biblical city in modern day Lebanon less than 100 miles south of Beirut.
His prize, titled “L'Homme au Gibus” (“Man with Opera Hat”), is painted with gouache on paper, measures about 12 inches by 9 inches and bears the late artist's signature in its upper right corner. It was painted in 1914.
The International Association to Save Tyre, dedicated to cultural tourism and socioeconomic development, bought the piece from a New York gallery with the help of a bank loan for slightly less than its $1 million worth.
Gonano said he's waiting to see the piece in person before forming an opinion of it.
“I'm pretty eager to see it,” he said. “This is crazy. I'm still in shock.”
According to the contest's website, its goal was to raise 5 million euros, or about $7 million. Funds will be used to support the creation of an artisanal village and an institute for Canaanite, Phoenician and Punic studies in Lebanon.
McCrory said it's possible Gonano could have the piece appraised at a lower value than $1 million, thus decreasing the taxes owed. However, the IRS has appraisers who could get involved, he said.
“ ‘Value' can mean different things to different people,” McCrory said.
Jennifer Jenkins, IRS spokeswoman, declined to comment.
If Gonano simply donated the painting to a museum, he would not have to pay anything, McCrory said.
“He would have the value of the painting as income and an equivalent amount as a charitable deduction. Zero tax effect,” he said.
However, McCrory said Gonano would be better off selling.
“If he sold it for $1 million and paid $365,000 in taxes, he would still have $635,000 left over,” he said. “That's a lot of money last time I checked.”
Barbara Jones, chief curator at the Westmoreland Museum of American Art, said while art is used frequently to raise funds for organizations, raffling off a piece worth $1 million is uncommon.
“It gave real people the opportunity to purchase something outside their purview,” Jones said. “It's amazing someone from Wexford won it.”
Sam Berkovitz, owner of Concept Art Gallery in Regent Square, said the contest's success could inspire other nonprofits to begin using high-priced art raffles to raise funds.
“I don't think it's a widespread process yet,” Berkovitz said. “Everything would have to be well set up, and the authenticity and value of the painting would have to be accurate.”
His best advice to Gonano, should he choose to keep the painting, is to insure it.
“If it's too overwhelming or too valuable an item to keep in the home, you might see if any of the museums would take it on as a long-term loan or consider selling it,” Berkovitz said.
Rachel Weaver is a staff writer for Trib Total Media. She can be reached at 412-320-7948 or email@example.com.
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