Artist Donating their Own Artwork to Charity

Discussion in 'Tax' started by MichelleinAtlanta, Sep 25, 2003.

  1. Isn't the charitable donation limited to the material costs?
    I have an artist client who thinks she is entitled to deduct
    the sales price of her paintings donated to charity.

    Thanks.
    Michelle Botwinick, CPA

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    MichelleinAtlanta, Sep 25, 2003
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  2. MichelleinAtlanta

    Dick Adams Guest

    MichelleinAtlanta <> wrote:

    > Isn't the charitable donation limited to the material costs?
    > I have an artist client who thinks she is entitled to deduct
    > the sales price of her paintings donated to charity.


    All creative geniuses believe donations of their work should
    be valued at what they believe the market is. It just ain't
    so.

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    Dick Adams, Sep 26, 2003
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  3. > Isn't the charitable donation limited to the material costs?
    > I have an artist client who thinks she is entitled to deduct
    > the sales price of her paintings donated to charity.


    She thinks wrong.

    Helen, EA in PA
    Member of The Tax Gang
    President, PA Society of Enrolled Agents
    Campaigning for NAEA Board of Directors - Looking for YOUR vote

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    Helen P. OPlanick EA, Sep 26, 2003
    #3
  4. "MichelleinAtlanta" <> wrote

    > Isn't the charitable donation limited to the material costs?


    Yup.

    > I have an artist client who thinks she is entitled to deduct
    > the sales price of her paintings donated to charity.


    Welcome to the real world.

    I'm trying to claim a $85 million loss because I didn't
    have the winning Lottery ticket.

    --
    Paul A. Thomas, CPA
    taxman at negia.net

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    Paul A. Thomas, Sep 26, 2003
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  5. MichelleinAtlanta <> wrote:

    > Isn't the charitable donation limited to the material costs?
    > I have an artist client who thinks she is entitled to deduct
    > the sales price of her paintings donated to charity.


    Yes.

    Pub 526 discusses charitible contributions and assuming an
    artist is in the business of creating art, the contribution
    is the lower of cost basis or FMV on date of gift. Cost
    basis is stated to be zero if the business property was not
    in inventory at beginning of the year. Pub 551 (middle of
    p 3) tells us that cost of created property is its cost
    basis. So lower of cost basis or FMV is almost always the
    cost of creating the item. Time and services are also
    stated to not be part of the charitible amount or the basis.
    I know IRS Pubs are not the official word but when pressed
    by a client I usually photocopy a couple of pages of pubs
    and circle the paragraphs in red pencil and say, There you
    go -- see why it's not allowed? us that the

    __
    Art Kamlet ArtKamlet @ AOL.com Columbus OH K2PZH

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    Arthur Kamlet, Sep 26, 2003
    #5
  6. MichelleinAtlanta wrote:

    > Isn't the charitable donation limited to the material costs?
    > I have an artist client who thinks she is entitled to deduct
    > the sales price of her paintings donated to charity.


    Funny thing, sometimes I'll tell a clinet "NO; nada, no
    way, jose", and then offer to quote chapter and verse.
    Usually of course that's not necessary, but there have been
    cases when they said no, but next year found somebody else.
    (sound familiar, anyone?)

    So, I would say DO quote her chapter and verse, say a
    photocopy of that chapter on Contributions relating to value
    of contributed labor in publication 17. While not THE tax
    law, it's adequate for these purporses.

    Cheer$,
    Harlan Lunsford, EA nexdoor in LA

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    Harlan Lunsford, Sep 26, 2003
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  7. MichelleinAtlanta

    Herb Smith Guest

    "MichelleinAtlanta" <> wrote:

    > Isn't the charitable donation limited to the material costs?
    > I have an artist client who thinks she is entitled to deduct
    > the sales price of her paintings donated to charity.


    Her donation is limited to her "cost basis" for works she
    created. That would be the cost of materials - her effort is
    worth -0- for this purpose.

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    Herb Smith, Sep 26, 2003
    #7
  8. MichelleinAtlanta

    D. Stussy Guest

    MichelleinAtlanta wrote:

    > Isn't the charitable donation limited to the material costs?
    > I have an artist client who thinks she is entitled to deduct
    > the sales price of her paintings donated to charity.


    You are correct and your client is wrong.

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    D. Stussy, Sep 28, 2003
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