Advocate for the Arts
This is for readers in the USA. Via 40 Watt I found the petition for a bipartisan bill (Support the Arts by Co-Sponsoring S. 548 or H.R.1524) that will simply allow artists to take a fair-market value deduction for works given to and retained by nonprofit institutions. It is important enough that I want to pass the message here as well, even with the caveat to be redundant.
The U.S. tax system accords unequal treatment to creators and collectors who donate tangible works (e.g., paintings or manuscripts) to museums, libraries, educational or other collecting institutions. A collector may take a tax deduction for the fair-market value of the work, but creators may deduct only their “basis” value—essentially the cost of materials such as paint and canvas.
All you have to do is to go here, sign with your info and the e-mail will be sent to the US Senators and House of Representative from your state.
Quite simple, it takes only 2 minutes to complete and we will all benefit.
You say that the current tax system is unfair to artists. Not so. Artists are treated the same as everyone else.
Let’s say I’m a plumber, and I want to help the local art museum. I have two ways to do it. (1) I can do 5 hours of work for John Q. Public, who pays me (say) $300. Then I can take that $300 and give it to the museum. Since I am able to deduct the $300 from my taxable income, the value I create by working for John escapes taxation. (2) I can spend 5 hours down at the museum installing their new drinking fountain for them, saving them from having to pay a plumber $300. The value I create by doing so also goes to the museum, and it also escapes taxation.
The artist is in exactly the same boat. She can spend her time making art to sell, and then donate the proceeds to the museum, taking a deduction on her taxes. Or, she can create art and give it to the museum directly. Either way, the value she creates for the museum escapes taxation. Allowing her to ADDITIONALLY deduct the presumed “value” of the art she donates directly would give her a special advantage that the plumber and others don’t enjoy.
This is a good analysis … but here it is a different point of view … if I own a photograph that I purchased before and I donate it to to a charity, I can deduct the whole price that I paid for tax deductions … now if I am the photographer and I donate the “same” image, then I can tax deduct only the cost of materials …
It is clear that the IRS is focused on the concept of money transfer, the value of an item it is only real after a transaction has materialized [e.g. a purchase] rather than considering the possible market value of the art object.
Thanks for sharing!
Miguel
But that’s because the artist never earned any income from the photo, so there is no deduction that must be made in order to shield the value created by the photo from taxation. It’s already shielded from taxation. The value created by the photographer in producing the photo was never taxed, just as the value created by the plumber working at the museum was never taxed. Why should the artist get an additional deduction?
Ed, because typically art is donated to a museum or charity to be auctioned off. The art has intrinsic resale value. Whereas the work done by the plumber in your example is not a tangible object that can be resold.