In April, 1945 – the waning days of the war – they arrived in the formerly idyllic town of Quedlenburg, home of the Quedlenburg Abbey, built by Otto the Great in 936. The abbey held countless, priceless, antiquities. All of which the townsfolk had hidden away in a mine shaft to keep them safe.
The men of the 87th were battle weary, bloodied, and just trying to get to the end of the war unharmed. Then a drunken soldier accidentally stumbled into the mine and the 87th quickly found themselves assigned to protect the treasure trove until the Monument Men arrived.
Boring duty for everyone except the tunnels’ new commanding officer, Lt. Meador. He was an art history major from North Texas State with post graduate studies on Biarritz, France. One of his classes was in Illuminated Manuscripts. It was noticed that he spent a lot of time in the tunnel.
In the weeks after Germany’s surrender the Monument Men took inventory, found that eight pieces were missing including a medieval illuminated manuscript and the Quedlenburg Gospels. Both books had jewel encrusted covers.
It was ruled a theft, making it the largest art theft of the 20th Century. The on and off again investigation ended when Quedlenburg became part of East Germany in 1949. It was forgotten by everyone except the residents of Quedlenburg.
Meanwhile, after a short teaching stint, Joe moved back to North Texas and took over his family’s hardware store and became locally renowned for his orchids.
Every once in a while Joe would gather his employees and show them the ‘marvelous’ books and curios he had inherited from a nebulous relative.
His family, however, knew the truth, Joe had mailed the pieces home from Germany in April 1945 via U.S. Army post. Joe died of cancer in 1980, leaving everything to his brother and sister. The total estate was valued at under $125,000, no mention was made of the books or curios during probate, they were wrapped in quilts in a closet.
Somewhere in the mid-80s things began to change. The books were used as collateral for a small loan and were moved to a bank vault. Rumors snuck out of Texas, reached Germany, the Soviet Union fell, the Germany’s reunited. A shadowy North Texas lawyer started making oblique overtures to art dealers and museums for a ‘once in a lifetime’ acquisition.
Eventually, around 1990, the German government and representatives from Quedlenburg met with the Meadors and after tortuous negotiations and agreed to buy back the books and objects for around $3 million.
A happy ending all around, but not for the Meadors. You see, they didn’t file an estate return with the IRS – the estate that they took through probate was below the estate tax limits. They then sold an asset of that estate for a few million dollars. A sale that was impossible to hide, especially as the whole thing ended up being the cover story in the New York Times Magazine in 1990. And a book. And a 6-part Discovery channel documentary.
The IRS was rather uninterested in what the Quedlenburg Treasure had been sold for and much, much more interested in what it was worth. The answer to that question was, according to every art expert in the world, priceless. The IRS interpreted priceless as over $200 million. The Meadors received an estate tax bill of $50 million, including penalties and interest.
It took over ten years of litigation for the Meadors to finally settle with the IRS.
There’s a bunch of lessons here, not the least of which is don’t assume that your valuation of an asset is the valuation the IRS or state government will accept. And, never assume the IRS is going away.