Tax Deduction for Charitable Gifts - Art

Time for our annual reminder that giving art to qualifying non-profit organizations can qualify you for a tax deduction for donations to charity. The general outline of the requirements are detailed in our post Tax Deduction the Charitable Giving of Art.

Please check with your tax advisor for any updates to the regulations surrounding the deduction.

Happy Holidays and get ready for the next season to roll around - Tax Season!

Tax Deduction for Charitable Giving of Art

It's that horrible season of the year again! No, I'm not referring to Christmas; it's "tax season" that I'm referring to. So time for our once-a-year reminder about the option to get a tax deduction for giving art to approved charities. I guess with the way the markets are this year, many people will have more capital losses than gains to worry about, but if you're in the fortunate position of having income against which you wish to make a deduction for donations, then don't forget the one available for gifting art to charities. We wrote this article on saving taxes by donating art some years ago now, so caution you to bring yourselves up to date on any changes that may have happened to the rules, Congress being the perfect example after all of the truth in the saying that "Idle hands are the devil's workshop".

Happy Holidays and Happy Tax Season!

Appraised Amounts for Art Deduction Widely Exaggerated

The LA Times lead a story from page one today on the wide-spread abuse of the deduction available for the charitable donation of art allowed under the current tax code (Link). Analysis of IRS data by the Times found that of the taxpayers who were audited for this deduction more than 52% had their appraisals rejected by the IRS, and almost 96% of appraisal errors favored the taxpayer.

The rules around the deduction make the deduction wide open to abuse if you can find a "sympathetic" appraiser or approved charity or non-profit organization willing to overpay for some quid-pro-quo in the background, which the LA Times in fact hints at in the article.

The chances of being audited, though, appear very slim. The article points out that in a broader decline in the number of overall audits, only 7 taxpayers out of 108,554 who claimed the deduction for charitable donations of art were audited in 2004! With numbers like that, the odds are obviously stacked in favor of those willing to be "aggressive" in their use of the deduction.

Rules for the claiming a tax deduction for the donation of art.