I wait. He has all the facts he needs. I give him time to study my baited hook.
“You will give me the Picasso at the freeport,” he finally says. And then: “You have other paintings at the freeport?”
As Shannon always said:Greed. And I worried Tarasov would be a difficult fish to land…
“I do,” I say, making my voice wary. “Just last week, I took possession of three new works.”
“I will take them too, when I take my Picasso.”
“You—” I start, as if I’m furious. He doesn’t even care about the artists. His goal is to humiliate me.
The feeling’s mutual. My hook is set. Time to play out the line a little. “Wait,” I say. “How much do you know about taxation of art?”
“Enough to take your paintings.”
“If I hand over all four, we both get hit by Section 918.”
“Section 918?”
“Check with your obshchak.” The bratva’s treasurer would warn him off my budding con in one minute flat. But I have to make Tarasov trust me. Suggesting he consult with his own man is a vital barb for the hook I’m setting.Go ahead. Bring in your own expert. I have nothing to hide here.“Or maybe your pakhan,” I add helpfully. “Your father might want to be involved with a deal of this size.”
“I am a brigadier in the Tarasov bratva. I do not need myfatherto take your fucking property.”
Even though he can’t see me, I show my palms as I shrug. Physically protesting my innocence lends the right tone to my voice as I say, “Look. You aren’t leaving me any options. But given the freeport’s Section 918 status and Interpol’s reporting requirements for multi-work sales under the Geneva Compact, I just assumed…”
It’s garbage, all of it. There isn’t a Section 918, and Interpol doesn’t require reports on art sales. If thereisa Geneva Compact, it has nothing to do with the taxation of art because I’m making this up on the fly.
But Tarasov has already backed himself into a corner, saying he won’t check with his bratva moneyman. Now he pushes with all the aggression I anticipated. “You assumed what?”
“That you’d want to exercise the one-time single-transaction safe harbor. ThenIdon’t get hit with 338(b) penalties, andyoucan avoid the capital gains for my collection’s stepped-up value…”
That’s the trick to working a good con—weaving in the familiar with the unfamiliar. Tarasov has certainly heard the termscapital gainsandstepped-up value, even if he doesn’t understand the rest of the gibberish I’m spewing.
“Wait!” I say, like I’ve just figured out something. “You were going to use Section 234 instead…” I pause, forcing myself to count to ten.
“Remind me of the details,” Tarasov says before I get to five. “About Section 234.”
“Section 234 transfers are exempt. If we establish fair market value, the three additional paintings would offset the capitalized basis of the Picasso. The buyers just have to hold their works for a year and a day to secure their above-the line deduction. Once their marginal tax rate maxes out at one percent, the bonus depreciation carries over because of the freeport’s non-cash status.” I stop spinning out nonsense and pause for a full breath. “All you need are three men you trust to hold your property for a year.”
“I have three men.” Tarasov sounds unhappy. It’s time to feed him something simple, something he’s sure to understand.
“Any Section 234 transfer will do. But an auction’s the easiest to pull off in one week.”
“One week.” Tarasov holds fast to the words. He understands the concept of one week.
“The transfer window,” I say, as if I’m jogging his memory. “Before the wash-sale regulations kick in.”
“My men must buy your paintings at auction by no later than next Monday.”
“Exactly.”
“And your freeport? It can handle this sort of auction?”
“It’s the best in the country.”
“Then do it,” Tarasov says.
“One week from today,” I promise. “Next Monday.” I give him the freeport’s address and tell him I’ll get back to him with a specific time.