Ann Saibeni-Art

Taxes and the Artist

Close Page to Return to Home Page

As artists most of us like to concentrate on art and not think about taxes. Unfortunately the real world intrudes on us.  Until recently I was unaware of several tax realities that affect artists and art lovers.  While I am far from a tax advisor, I thought I would share the following thoughts. Please check with your own tax advisor, however. Tax laws are complicated related to charitable  giving.

 ·        Donating Works of Art: I assume most of you like me are often asked to donate art to charity auctions.  My most notable auction painting is Good Company, auctioned by Sacramento's PBS station KVIE during the station's 2005 fund raising event.  Of course I was proud to be selected and to have won 1^st prize in the watercolor medium category.  What many artists may not know is that the charitable deduction resulting from my donation to this 501(C)(3) organization is limited to my actual costs, not the market value of my painting.  Yes, I still would have contributed this painting and other paintings, but I am glad I know how this should be reported on my taxes.  Most of us do not need trouble with the IRS. For those who like to read IRS publications, you can read what the IRS says, see Publication 526, Charitable Contributions. Most of what the IRS says seems to reinforce that "no good deed goes unpunished".

·        Donating Collectible Art: A similar downer awaits those who give a collectible painting to a charity that has appreciated significantly since buying the painting. If you give the painting to a charity that plans to sell it to raise money, your deduction is limited to your cost, not the market value of the painting. The rules are complicated and certain requirements have changed for art given during 2006. If you plan to give collectible art to a charity have your tax advisor on speed dial. See  IRS  Publication 526,  "tangible personal property that is put to an unrelated use by the charity"

·        Vacation Home Donations: Some artists and art lovers may offer vacation homes to charity auctions for high bidder use.  Most who offer their homes for such use consider the days used by the high bidder as rental days. Unfortunately the IRS considers these days as personal use days, not rental days since the owner did not receive a fair market rental for the use of the home.  In addition to not qualifying for additional rental expenses, the owner receives no charitable deduction for donating the use of the home to charity. This situation is also very complicated and again requires your tax advisor be on speed dial. See IRS Publication 526,  for non-deductibility of vacation home use donation. Regarding charity use  being considered personal use, the IRS opinion  may be found in an IRS  Revenue Ruling. See, Rev. Rul. 89-51, 1989-1 C.B. 89.

..