Artist Donating their Own Artwork to Charity


M

MichelleinAtlanta

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
 
D

Dick Adams

MichelleinAtlanta said:
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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H

Helen P. OPlanick EA

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
 
P

Paul A. Thomas

MichelleinAtlanta said:
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.
 
A

Arthur Kamlet

MichelleinAtlanta said:
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
 
H

Harlan Lunsford

MichelleinAtlanta said:
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
 
H

Herb Smith

MichelleinAtlanta said:
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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D

D. Stussy

MichelleinAtlanta said:
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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