Maximizing the Tax Deduction for Charitable Gifts of Art Can Be an Art in and of Itself

Joy Berus

 (attorney, Orange, CA) has published an article entitled The Art of Donating Art, Heritage Trusts & Estates Newsletter, 2nd Quarter 2010, at 1.

The article briefly explains the following considerations that are relevant when deciding to make a charitable gift of artwork:

• Donating appreciated objects & long-term capital gain objects can provide a larger income tax deduction. 
• Donating to a public charity that meets the “Related Use Rule” will maximize the charitable deduction benefits.
• Verifying that the qualifying charitable organization accepted the donation will assure you that the charity wants your gift. 
• Donating a partial interest in the art over time may be desirable to the client, but there are strict rules that may reduce the tax benefits of the gift. 
• Making a charitable bargain sale will generate some income and an income tax deduction for the gift of the difference between the sales price and the fair market value of the art. 
• Hiring a qualified appraiser and obtaining a qualified appraisal report will comply with certain rules for obtaining tax benefits from a charitable donation of art, assuming the report is received within the proper timelines. 
• Obtaining and relying upon a statement of value from the IRS for donated artwork appraised at $50,000 or more will protect the gift from future audits and penalties. 
• Soliciting the help of other professionals, such as a CPA or experienced art dealer, may provide beneficial insight.