ABOVE: Carl Beam’s Whale 10. Some of Beam’s artwork was the subject of an Art-flip scheme, apparently a common tax-evasion practice in Canada.

Here’s something to brighten your day as we begin this darkest of winter months: obscure Canadian tax law! Hurrah! The Federal Appeals Court last week ruled that Caedmon Nash, of British Columbia, and two other individuals, couldn’t claim the hefty tax benefits which came from donating art to Ferris State University in Big Rapids, Michigan. The reason they say Nash et al. aren’t playing by the rules is because they bought artwork in bulk, held on to it for a few months, and then after an appraiser for the university had significantly bumped up the value of the art, donated it for the tax credit. Revenue Canada says this is a tax dodge, and the court agreed (this time).

The math is creative, as is so much math in tax law: Nash borrowed $9,000 and bought 85 works by artists including Carl Beam, Russell Noganosh, and Richard Bedwash. A few months later, he donated the pieces (keeping one as a memento), with a magically increased assessed value of $30,000, which was good for a $13,000 tax credit. Profit: $4,000. Canada is apparently working to close this little loophole, but at the moment, it’s in the interest of donors to pull the buy-low-donate-high move, and it’s in the interest of the institutions they donate to to keep on hiring appraisers with an optimistic outlook.

LINK: Globe and Mail > Art-flip schemes flop