FEDS GET ARTSY
Let’s face it: if there’s a fundraiser to be held — be it for breast cancer research, hurricane victims, upgraded pet shelters, or homes for crack whores — somebody’s eventually gonna ask an artist to donate some artwork. Which the organizers will happily auction off for a few hundred, or even a few thousand, dollars to raise some cash for the cause.
Little piece of trivia for you, though: under current U.S. tax law, the artist donating the artwork is able to claim a tax deduction based not on the actual value of the artwork — on what it was purchased for, for instance — but only on the value of the stuff it’s made of. So a painting that sells for, say $3,000 is, in the eyes of the IRS, worth little more than the cost of the canvas and some paint — until, of course, the buyer donates it himself, and can claim the full purchase value as a deduction. Huh?
That may be about to change, if Congress somehow gets its priorities in order. Under a bill recently passed by the Senate, living writers, musicians, artists, and scholars who donate their work to a museum or other charitable cause would earn a tax deduction based on its full fair market value, not just the cost of materials.
“The prices artists put on their work is not arbitrary,” says Karin Olah, a local artist represented by Corrigan Gallery on Queen St. “It’s based on experience, time, commitment, and demand. An artist can take $140 worth of wood and canvas, paint and patience, and turn it into a $20,000 original work of art. If this legislation goes through, artists can donate work to museums and charities with the same benefits that collectors have.” Right now, though, she says, “The IRS is starving our artists.”
Under the bill, artists could donate their work during their lifetimes at full market value as long as it’s properly appraised and handed over at least 18 months after its creation. The Senate measure was approved two weeks ago as an amendment to a broader $59.6 billion tax relief bill passed by the Senate. (For the moment, though, it’s gathering dust in a House-Senate conference committee.)
The bill’s not just a boon for artists; it would also be a welcome relief for cash-strapped museums. If the Gibbes Museum of Art had an interest in acquiring a new work from a Charleston artist, for example, they’d have to either cough up the full market value of the work — call it $20,000 — or ask the artist to give them the artwork for considerably less than she might earn for it on a sale to a private collector, in which case she could still deduct only a few hundred bucks for the materials. Until that changes, it’s the artists who’ll be starving, not the art collectors. — Patrick Sharbaugh
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