Artists should have same tax deductions as collectors when donating works of art

The current law is unfair to artists, hurts museums and libraries and results in fewer donations

Art museums large and small depend on donations from art collectors to build and sustain their collections. By creating a tax incentive for these donations—donors receive a tax deduction for the fair market value of works of art they donate—the US Congress has supported the development of non-profit art institutions and expanded the public audience for art. But artists donating their own works receive a deduction only for the cost of materials used to create the work, for example canvas and paint.

The Art Dealers Association of America believes this standard is inequitable and is lobbying the government to change the law. The Artist Museum Partnership Act is a bi-partisan bill currently before Congress that would allow artists to donate under the same conditions as art collectors. The current law must be changed as it is unfair to artists, hurts museums and libraries around the country, and results in fewer donations of American art to non-profit institutions.

According to Americans for the Arts 2007 survey, the cultural industry produces more than $160bn in total economic activity and generates $12.6bn in federal income tax revenues. Therefore, the approximate $25m cost of restoring a partnership between museums and artists is greatly offset by the substantive economic contributions made by the arts and cultural sector.

The Artist Museum Partnership Act would have the greatest impact on smaller, regional, museums. These institutions need assistance in expanding their collections. Donations by artists would bring American contemporary art to new communities and increase the audience around the nation. Incentives for artists to donate their works will help ensure that significant American cultural assets will remain in the United States and not be lost to other countries.

To bring greater awareness to the issue, the Art Dealers Association of America has launched 50 Artists for 50 States, a national initiative to coordinate pledges by some of the country’s leading artists for donation to a museum in each of the 50 states. These donations would take place only with the passage of the Artist Museum Partnership Act. This legislation will support equal treatment for artists and help develop museum collections.

Roland Augustine is President of the Art Dealers Association of America

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Comments

28 Oct 11
15:3 CET

SONIA, TEXAS

It is really unfair that artists can not write of their artwork that is donated. I think that whatever the item goes for should be able to be written off. A lot of other businesses take larger write offs for items they donate that they themselves get at wholesale.

4 Mar 11
2:47 CET

JOAN, CALIFON

i donate a painting to an 501c3 charity. they have an auction. my painting sells for $500. they write me a letter, with their ein #, thanking me for donating my painting and for the $500 that it brought to the charity. why cant i claim the $500 on my taxes? thank you.

1 Dec 10
16:1 CET

IN THE ARTS, NEW YORK

Sale prices at benefit auctions have little to no effect on the market value of an artwork. Qualified appraisers are rigorous in their examination of the market, including primary and secondary market sales. As with anything, there are those who take advantage of the system, but there are also many who take their work seriously and would never intentionally inflate value. I think it's shortsighted to say art appraisers are not credible based on what happened with sub-prime real estate (David, Denton). I think the point is, if any individual is allowed to take a deduction based on an appraised amount, then artists should too. Most credible museums have policies about what they collect and carefully vet material they accept from potential donors. Without philanthropy, none of us would ever see important works of art. By excluding artists, we are keeping art in private hands, and keeping most artists in virtual poverty. Why should they not get a tax cut for charitable donations?

4 Nov 10
14:40 CET

EDWARD, ANCHORAGE, AK

What about when you donate a work of art to a non-profit for a fundraiser auction? Wouldn't the price obtained determine the value of the donation? I donate a painting each year to public broadcasting for their on-air auction. I've not deducted anything from my taxes because it wasn't worth keeping records to show the cost of paper, framing materials, etc. I'm happy to donate, but I don't think it's unfair to take a deduction for the amount realized by the non-profit. After all, the person who purchases the work is only allowed to deduct the amount by which the purchase price exceeds the fair market value, and that can only be determined by a separate appraisal after the sale, I believe.

23 Sep 10
16:21 CET

A LAWYER, CLEVELAND

The United States Tax Code and the tax codes of each state are law. Under these, there are numerous taxes that people must pay. I am not sure where the first poster got the idea that there is no law requiring people to pay taxes, but she is wrong. There are many (many, many) laws, on the books, requiring people and business to pay taxes.

1 May 10
21:41 CET

VIRGINIA, WILLIAMSBURG

This tax law does not just single out artists -- it applies to ALL donations of an individual's labor, whether as a volunteer receptionist, fund raiser, docent, cabinet maker, publicist, etc. One difficulty is valuing an individual's labor. But there is another consideration: they have never claimed any income on the value of that labor. The alternative is for the artist (or other "laboring donor") to charge the institution for their labor (and be paid for it), claim that amount as taxable ordinary income (and pay all of the various applicable taxes), and then donate the resulting gross payment back to the charitable organization, then they could claim the tax deduction for that remitted amount. Seems much simpler just to not try to deduct the value of your labor.

12 Oct 09
2:21 CET

DAVID, DENTON

Let's see...appraisers...aren't those the folks who recently almost crashed western civilization through the use of inflated values for sub-prime real estate loans? Does anyone believe that Art Appraisers have greater credibility? Also, a museum near me has a collection of 90,000 objects. Only about 5% of these will ever be exhibited. This serves no beneficial purpose for society. Art is just being donated for a tax deduction only to be put into storage never to be seen again.

20 Sep 09
14:14 CET

J. UNRUH, NEW YORK

I think some clarification is needed as a response to prior comments. 1) Paying taxes are the law. The *U.S. Constitution* gives Congress the power to do levy taxes, and it has. 2) Deductions are only available for charitable donations. That means, only to organizations that qualify. Charitable organizations must file (with the gov't) and qualify to be recognized as such. Valuation will be an issue, but the IRS tends to provide guidelines for other types of donations so I would expect something like that for artwork. (Bound to be controversal). Also, one can only make use of the charitable donation deductions if you itemize deductions. I am an artist, but it is a very rare year that I can take anything but the standard deduction. Lastly, an excess of charitable donations, particularly in regards to income amount, will undoubtable raise a red flag for an audit. In such case, artists should be vigilant about having good valuations. This might mean getting an official appraisal on donated work. Also, not all organizations will *accept* donations. You can't force a donation on a charity. (This is all assuming the law gets changed...)

20 Sep 09
14:14 CET

CLARISSA, OVERLANDPARK KS

Did you know paying tax isn't even a written law? Of course, refusing to pay taxes gets you into a hole thats hard to claw your way out of, but I would deffinetly petition and protest to this, because art is absolutely one thing I hope can keep it's distance from the government [at least to the best of it's ability]. Art is the one thing that pulls people through difficult times and to intertwine itself with the choas dealt by the hand of the big man... I think I might be sick.

20 Sep 09
14:14 CET

LOZANGE, TORONTO

More than collectors. Their sacrifice is bigger.

20 Sep 09
14:14 CET

NATALIA SACASA, NEW YORK

Private collectors must get a fair market evaluations for work that they donate to institutions for tax breaks... so the same system can be easily used by artists. a third party is required to perform an impartial evaluation of the value, this has been deemed fair for the private individuals, why not the artists??? and before a work is accepted into the collection, a group of curators and representatives from the museum or art institution must agree to accept the work, this seems to me an appropriate screening process so that not just "any person with a paintbrush" can get in to these collections... so really there is no reason this act should not go through.

20 Sep 09
14:14 CET

RANDY SOUDERS, FORT WORTH, TX

The trick is in verifying true fair market value. An artist must be able to show proof of having actually sold comparable works in the open market during the recent past. I see a whole host of problems: is valuation determined by size, subject, historic prices (high, low, average, old, new), gallery or auction sales. It's no secret that art prices fluctuate wildly are subject to all sorts of manipulation and fraud by dealers and collectors. Without some sort of valuation system, every person who can lift a paintbrush will try to paint their way out of paying their taxes. Without knowing the specifics, the 'Artist Museum Partnership Act' would appear to benefit the top tier of artists and few others. So what about those on the lower end whose works aren't quite 'museum quality'? What's to prevent these artists from donating works to any non-profit, non museum organization as well? Would this benefit every working artist or just a select few? And would this result in a deluge of artworks stacked in warehouses rather than on public display as intended? As a professional artist for 3 decades, I'm all for anything that will allow me to write off a donation of my labor in addition to the cost of materials. I just see a lot of problems getting it passed.

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