RONALD MARK SEMARIA,  CFE, DABFE, FACFEI,CSC, CHS-III
 CERTIFIED FRAUD EXAMINER & FORENSIC ACCOUNTANT
 DIPLOMATE & FELLOW AMERICAN BOARD OF FORENSIC EXAMINERS
 FRAUD, TAX, MANAGEMENT & INVESTIGATIVE ACCOUNTANT
 FORMER INTERNAL REVENUE AGENT
 SPECIALIZING IN EMPLOYEE THEFT & EMBEZZLEMENT

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ART DONATION APPRECIATION

 If you donate artwork that’s appreciated significantly, make sure you get the highest deduction available. You must clear a number of hurdles before you can write off the full market value of the contribution.

 Let’s say you bought a painting for $4,000 a few years ago that’s now valued at $10,000. Donating the painting can generate a $10,000 deduction, which could save you up to $3,860 in federal income tax, depending on your tax bracket. State and local tax deductions may increase your savings. However, to earn the full deduction, you must meet these tests:

            1.      The donated art must have been yours for more than a year

2.      The art must be donated to a public charity or nonprofit group, not to a         private foundation

3.      The art must be appraised by a qualified, unrelated party

4.      The “related use” rules must be satisfied. These rules prevent you from deducting the full amount if you donate artwork to a local charity and the organization turns around and sells it.

 To pass the “related use” test and earn the $10,000 write-off, donate the painting to an art museum displaying that type of work or to a university that uses such paintings in art history courses.

The following articles are for informational purposes only, and your should always consult with your tax advisor to determine the tax implications for your particular financial situation.

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