By ERIC FELTEN
Oh, the perils of found-object art. Over the course of some 20 years, art dealer and collector Ileana Sonnabend negotiated with federal regulators over a prized possession: "Canyon," a work by artist Robert Rauschenberg that combines a painting, a rope-trundled pillow and a stuffed bird. The problem was the bird—a young bald eagle of obscure origin. And now, five years after Ms. Sonnabend died, the problem continues to be the bird. Under federal statutes that prohibit any traffic in bald eagles or their remains, the artwork cannot legally be sold to anyone. And yet the Internal Revenue Service is demanding that Ms. Sonnabend's heirs pay $40 million in taxes on "Canyon." It's the sort of case where you wonder if the IRS agents are named Willem and Franz.
The mantle of art provides little mediation or mitigation when it comes to endangered species. When Lawrence M. Small was made secretary of the Smithsonian Institution a little more than a decade ago, he let some magazines photograph his collection of Amazonian tribal art, much of which was made of feathers of protected rain-forest birds. The articles and photos were perused with keen interest at the U.S. Fish and Wildlife Service, which soon began an investigation. That he considered the items art made no difference—Mr. Small eventually pleaded guilty to federal misdemeanor violations of the Migratory Bird Treaty Act.
Does it help if the artwork is famous? Perhaps, as art lawyer Ronald Spencer notes, it is "bad public relations to destroy works of art," and that can temper the urge to seize. Still, counting on enforcement agencies to be reasonable is a dicey strategy. What is deemed all right under one administration might be discovered to be not all right at all once different officials are in place. The stuffed bird adorning "Canyon" first caught the attention of Fish and Wildlife Service agents in 1981, when the artwork came back through U.S. Customs after a European tour. The Interior Department seems to have been rather accommodating at the time, giving Ms. Sonnabend a permit to hang on to the piece.
But it was a different story in 1998 when she tried to lend "Canyon" to an international retrospective of Mr. Rauschenberg's work. The Sonnabend Gallery "encountered resistance from a new administrator at the Department of the Interior," as ARTnews put it. Federal officials notified the gallery it would have to "relinquish the carcass to the U.S. Fish and Wildlife Service" or donate the artwork to a nonprofit museum—unless "the carcass was taken from the wild prior to 1940" (when the Bald Eagle Protection Act became law).
But how to prove that? This is when the gallery again enjoyed the benefit of regulatory discretion. Mr. Rauschenberg was allowed to simply swear before a notary-public that the eagle was old enough to be legal. He told a quirky story about how the bird had come into his possession. It seems that an artist friend living in an apartment above Carnegie Hall rescued the dingus from the trash in 1959. The eagle, the story went, had belonged to an aged tenant who in his youth "was a member of Teddy Roosevelt's Rough Riders." According to Mr. Rauschenberg's notarized statement, "this Rough Rider acquired, from the wild, a bald eagle which he had taxidermed prior to 1940." When the old cowboy had died, his family tossed the unwanted bird in the garbage. Though the artist was recounting a third-hand tale of an unknown, unnamed cavalryman he had never met, Mr. Rauschenberg's account was accepted as appropriate documentation. Who said the feds can't be reasonable?
Not everyone gets such benefit of the doubt. Just imagine if Gibson Guitar Corp.—locked in a dispute with the Fish and Wildlife Service over the legality of foreign wood sourced for its instruments—had ever tried to offer proof of provenance as flimsy as the artist's notarized statement. But then again, in its dispute Gibson chose not to make nice. The company has been challenging Fish and Wildlife rulings in court. Which might help explain why, a year ago, heavily armed and body-armored agents descended on the company's Nashville factory to seize guitars and pallets of wood.
The Sonnabend heirs would ultimately find out how unreasonable enforcement agents can be. When the IRS first came looking for some payment on the unsalable "Canyon," the tax agency told an attorney working for the estate, Ralph E. Lerner, that the artwork was worth $15 million. But the lawyer refused to agree to that number, insisting that, because there is no legal market for the painting, it has no dollar value. Then, in what Mr. Lerner described to Forbes as the "most shocking part" of the whole fiasco, all of a sudden the IRS issued an official Notice of Deficiency declaring the Rauschenberg to be worth $65 million. Which would suggest that the market value of going along to get along is somewhere around $50 million.
The IRS valuation isn't necessarily crazy, even if its justification—the idea that an imagined black-market value should be binding on people not engaged in black-market transactions—is. But thanks to federal law, that value is entirely hypothetical.
How arbitrary is it to take a good off the market and then demand taxes be paid on an imaginary, indeed illegal, market price? The circumstances may be rare and peculiar, but the capriciousness of officials appears to be all too common.
A version of this article appeared July 26, 2012, on page D10 in the U.S. edition of The Wall Street Journal, with the headline: Bald Eagle Is a White Elephant Thanks to Uncle Sam.
Zurich's lively contemporary art scene has taken to the streets this summer in "Art and the City," an international exhibition that includes a number of today's most collectible artists.
The event (until Sept. 23) was initiated by the city's government, which worked with galleries and other art institutions to bring pieces by more than 40 artists from around the world into Zurich's public spaces, including sculptures, installations, posters and performances. Works span the abstract, figurative and conceptual, reflecting the wide diversity of contemporary art today.
Zurich has a high number of top-quality galleries dealing in contemporary art that make the city an interesting stop for international collectors.
With this summer show, says Zurich Mayor Corine Mauch in the catalog's introduction, people can wander "through a city which is evolving, growing and continuously expanding its horizons through art."
Two white marble armchairs comprising "Sofa in White" (2011) by Chinese artist Ai Weiwei stand on the square outside the headquarters of Credit Suisse, inviting passersby to take a seat. The works play on the theme of globalization, reproducing one of China's most popular sofas in the heart of the financial district.
A five-minute tram ride away, on the site of a weekly farmers' market, Indian artist Subodh Gupta deals with the topic of the sustainability and flow of commodities in a more than 5-meter-tall metal bucket that recreates in giant size the vessels commonly used to carry water in his country's villages. This is one of my favorite pieces in the show.
The gentrifying quarter of the city known as Zurich West will host most of the show's works. Formerly an industrial area, this district has turned trendy, with emerging high-rise buildings, cultural institutions, galleries and restaurants.
On the wall of one tall building, which houses the headquarters of the Migros retail chain, British artist Martin Creed has installed one of his popular neon pieces with the slogan, "Every thing is going to be alright."
Beneath a railway bridge, Swiss artist Franziska Furter's "Mojo" (2012), a colorful concoction of magic amulets, hangs like a chandelier, moving and tinkling with the wind. "Kids love it," says Etienne Lullin, her art dealer.
At a busy traffic intersection, Cuban duo Marco Castillo and Dagoberto Rodriguez (known as Los Carpinteros) have placed "Catedrales" (2012), five red-brick monoliths embodying attachments for a cordless electric screwdriver, as an ode to craftsmen. They stand like guardians of peace.
Another monumental work, and among my favorites, is Swiss artist Alex Hanimann's "Vanessa" (2012), a 5-meter-high chrome statue of a tomboyish teenage girl that gleams in the sun and reflects the surrounding buildings. Californian artist Paul McCarthy creates a more sinister note with "Apple Tree Boy Apple Tree Girl" (2010). The aluminum sculptures seem playful but express a disgust with the destruction of childhood innocence through commercialization.
The Zurich West Löwenbrau Areal center, a former brewery, will reopen Aug. 31 after two years of restoration. It is a notable event for the city as the center will once again house major art institutions.
Hauser & Wirth, one of the world's most influential galleries, will open with a show of Paul McCarthy works. Galerie Bob van Orsouw, a Swiss gallery with a nose for new talent, will inaugurate with upcoming U.S. object artist Hannah Greely. The Kunsthalle Zürich, which first discovered numerous now internationally successful artists, will present a show of new works by German photo artist Wolfgang Tillmans. And the Migros Museum, which has a renowned collection of cutting-edge art, will open with hip Icelandic performing artist and painter Ragnar Kjartansson.
Write to Margaret Studer at wsje.weekend@wsj.com