By: A.J. Cook

Wouldn't a 100-ton boulder chiseled here and there make a dandy tax deductible gift any college would love to have? Thomas G. Murphy thought so.

The opportunity came when the California Transportation Department removed a 100 ton sandstone boulder hanging dangerously close to some Malibu homes. Sculptor Brett Livingstone-Strong, using jack hammers and chisels, carved John Wayne's face on it. He sold it to Murphy, chief executive officer of Tom Hopkins International, a motivational and self-help company, for an undisclosed price.

Hoping to increase its value, Murphy launched a major publicity campaign. He printed brochures proclaiming it was worth $1 million. He constructed a building at Manns Chinese Theatre in Hollywood to exhibit it near Wayne's hand prints in the sidewalk. He even bought a float to display it in the Hollywood parade.

After inflating the sculpture with publicity, he donated it to Lubbock Christian University. The University president promised it would be "a permanent resident."

When Murphy deducted $500,000 as a donation, the Internal Revenue Service reviewed his return with stony silence. Then the agency carefully studied the deduction and began chipping away. In the Tax Court the appraisers encountered a major problem. Usually they estimate values based on sales of comparable items, but here nothing compared to the big rock.

Murphy's appraiser justified his $500,000 value in two ways. First, he said this piece of art probably received more publicity than any unique sculpture other than the Statute of Liberty. Then, he compared it to the artist's million dollar Presidential Monument. He said the White House staff had commissioned that. Actually the staff had not and, with the present $1 million asking price, it had no takers.

The government's appraiser challenged the sculptor's reputation, saying he had no broad-based gallery representation. None of his work had sold for more than $100,000. The appraiser valued it at $30,000.

The judge accepted the government's appraisal and criticized Murphy. He disputed the brochure's claim of a $1 million value because no evidence supported this. The court added a penalty, saying Murphy gave false information to his appraiser, who believed the "puffing fed to him." As important as any other fact, the sculpture was a trifle flawed. The Duke was missing his left cheek, left temple, part of his left eyebrow and the left side of his chin.

A.J. Cook is a lawyer and CPA. His tax column appears weekly in numerous newspapers. Why isn't it published in your hometown newspaper? Ask its Business Editor to subscribe.

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Released 12-18-95