Artist Tax Deductions

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Bloomberg has a good article on possible legislation for changing artist charitable donation tax rules. As most appraisers are aware, the current law only allows artists to deduct the cost of materials when donating their art. For years many cultural organizations have lobbied congress to change the law so the artist would be able to deduct the fair market value of their art. Different legislation has been discusses and promoted, but still no action has been taken.

The article does not indicate action will be taken, but there is a decent amount of support for a bill on the hill. The Bloomberg articles notes there are 90 house members co-sponsoring a bill and 23 senators backing a bill by Senator Patrick Lehahy to change the tax code. The current tax law for artist donations has been in effect since 1969. The statics show a large decline in artists gifts when compared to prior to the change in tax law.  This amounts to much lost cultural property for our museums.

This is the first article that I found that looks at both sides of the issue. A point is made that artist would get a double benefit, no income tax to pay on the created work plus a deduction.
The article states

While Congress debates tax cuts, U.S. artists wonder if they’ll ever get the same tax break extended to the people who buy their work.

Ninety lawmakers are co-sponsoring legislation introduced by Representative John Lewis of Georgia and 23 senators are backing Senator Patrick Leahy of Vermont’s measure to change the tax code so that artists can take a deduction for the fair market value of their work when they donate it to a museum, as collectors do.

Before a 1969 change in the tax code, artists did enjoy the same tax benefits as collectors. Now they can deduct only the cost of tools used to create the piece of art, like brushes and canvas.

Representative Lewis, who sits on the tax-writing House Ways and Means Committee, said in an e-mail that “the current tax code has the end result of robbing this nation of so many highly celebrated works.”

In the three years up to 1969, according to art-advocacy group Americans for the Arts, the Museum of Modern Art in New York received 321 gifts from artists; in the three years after, the museum received only 28 works from artists -- a drop of more than 90 percent.

To read the full article, click HERE.