Artist should be valued

As I understand it, the old "materials value only" rule applies evenly to *everyone*, not just artists. If you are a truck driver and agree to drive the artist's pots to the museum, you don't get to deduct for your time as if it were a regular paid-for delivery. Nor does a carpenter who agrees to crate the pieces, etc.

And it doesn't apply just to museum donations, it applies to all donations. It probably has to be this way to prevent abuse. Consider the old scam whereby people donate their old books or junk and claim a hefty market value. If they were allowed to claim a value for their time, it would be even harder to verify.

And art is in a class by itself as far as being hard to assign market values. Unless the piece has already been sold, it's not at all clear what its value is. Certainly *not* the price the artist has been asking for it as it languished in the last umpteen art fairs, nor even what the posh uptown gallery is asking.

So, if you are an artist who is affected by this, the solution is simple: Put your money where your mouth is and *sell* the piece, and donate the money to the museum!

For the rest of us, the thrill of having a piece in a museum, not to mention the boost in professional stature and the increase in the market value of other for-sale pieces, would be more than enough compensation.

Best regards,

Bob Masta DAQARTA v3.50 Data AcQuisition And Real-Time Analysis

Scope, Spectrum, Spectrogram, FREE Signal Generator Science with your sound card!

The problem is Bob that few artist can afford to sell the piece and donate the money earned. Even when they donate the piece they are not getting that price in return in their taxes. We are talking about a deduction not a credit - so if you are in the 20% tax bracket then you get 20% of the estimated value of the item taken off of your salary that is taxed - then add in the lovely AMT which limits even that. As far as scamming goes - they are now pretty ridged about what they allow - you have to document your donations and something such as this would have to be valued by the museum not by the artist.

When I volunteer my time at the crafts studio, I would never dream of trying to take a tax deduction for that time. That is something very different from a piece of art that will not only hold its value but increase in value over time. The museum if it needed the money could sell the work of art. It cannot sell the crate it was shipped in or the time I took building that crate.

Apples and Oranges. Donna

It's not at all clear why artists should receive special treatment. Consider the carpenter who builds a house for Habitat for Humanity. All the same arguments about holding value apply here as well, and the value is easily verified. Yet the carpenter can't claim that value, only materials.

Having a piece in a museum is a benefit for the artist, much more so than a Habitat for Humanity house is for the carpenter, since the museum exhibit will be a continuing advertisement, with prominent attribution. Any artist who feels they need added financial

incentive is being a tad greedy, IMHO.

I also wonder about the premise that few artists can afford to sell the piece and donate the money. If your work is so good that museums want it, you can't be hurting too badly.

Forgive me if it seems I have my hackles up over this, but I do not think artists should be placed on any sort of pedestal. If they can't succeed at doing the thing they love as a business, they should find another line of work and do art as a hobby, just like everyone else. Nobody owes them a living just because they hang out a shingle and proclaim themselves as artists. If a carpenter can't make houses that people want to buy, he can change careers or starve... but he sure can't expect charity just because he is no good at his proclaimed profession.

Best regards,

Bob Masta DAQARTA v3.50 Data AcQuisition And Real-Time Analysis

Scope, Spectrum, Spectrogram, FREE Signal Generator Science with your sound card!

Should not it be the case that you argue for the carpenter being allowed to deduct the value of what they have produced instead of arguing that artist can't because carpenters can't? I understand not allowing 'salary' of time served to be deducted. A famous movie star who hosts an event would not get to deduct the hourly wage he would normally get. You can not resell that time contributed. With art or a craft however you can continue to sell the item donated.

What bothers me is the lack of value we as a country place on crafts, the arts and intellect. We have become a nation of warriors that only cares about how much bigger and badder we are than everyone else. Sports now dominate TV while PBS/NPR are demonized. The first thing cut in education programs are the arts and music (despite research showing that teaching young children music vastly improves their ability to do math and that art has great therapeutic value). You know I would be perfectly fine with them having no taxes at all up to a certain level of income and then having no deductions for anything. If you make money, you pay a tax on it and that includes capital gains. That isn't how things work currently and believe it or not poor people and lower middle class pay far more of their wealth in taxes (sales, SS, Med, local, etc.) than the wealthy do.

Donna

When I heard this issue talked about on the TV, they said what was behind this issue, was that the congressmen wanted to get a "deduction" for the donation of their personal papers , etc. to a library. The deduction for artists was just a side thought, in that the old system of recording how much white, red, paint you used in the painting, for deduction purposes. also: Just think, most of us would be taken care of and work for the King in olden days. ;-) ren

My main objection was to preferential treatment for specific groups. (Don't get me started on clergy!) So your proposal that everyone gets a deduction based on value seems fair and reasonable. But I can't see any logical reason why it should be limited to durable goods with resale value, other than that it might be easier to get appraisals. However, determining value opens a big can of worms.

It's also sad that people should need financial incentives to make charitable contributions. My attitude is that the donation itself is an investment toward the world I wish to see. The investment "pays dividends" to the extent that the recipient organization furthers those goals.

Agreed. As far as cutting school programs, it seems to me that competitive sports should be the first thing cut. I don't think schools need to teach competitiveness, and there are much better ways to teach teamwork. Arts, crafts, and music are things that will benefit people throughout their lives. I think one of the hidden benefits of art, in particular, is that it encourages people to be creative, by which I mean "think outside the box", not just "make something pretty". It seems to me that the vast majority of people are afraid to try different approaches to things (even music and crafts!), apparently from lack of self confidence. "What if it turns out bad?" With art, "turning out bad" means you learn something about what works or what you like, and you can always try something else the next time.

Best regards,

Bob Masta DAQARTA v3.50 Data AcQuisition And Real-Time Analysis

Scope, Spectrum, Spectrogram, FREE Signal Generator Science with your sound card!

Exactly! I am hoping that we are moving in that direction - Oddly Bush meant to bankrupt the government out of social services (has said so directly), but he may have bankrupted us out of the warrior mentality. Physical activity that kids enjoy is great and important for their health - resources to beat the crap out of the rival school... not so much. Donna

If a collector buys a work of art, and donates it to a museum, they can deduct the fair market value at the time of the donation, not just what they paid originally. This can work out to a tidy profit for the donator. But if the artist who made it donates it, all he/she can deduct is the original price of materials. Is this fair?

When an artist dies, by the way, the value of their art in the estate is assessed at fair market value - the big problem alleged in fixing value seems to disappear. Often, the heirs are forced to sell it off at fire-sale prices to pay the tax owed, and can't afford to donate any to non-profits. Is that fair, or in the public interest?

Bob writes: "If your work is so good that museums want it, you can't be hurting too badly." I wonder what planet he comes from. Here on earth, being able to produce art that's good -even good enough for museums - does not guarantee any monetary income at all. Yes, you can indeed be hurting badly. While artists, I agree, should not be accorded specially favorable treatment in the tax code, neither should they be singled out for specially unfavorable treatment. Any other manufacturer who donates their products to a recognized non-profit can deduct the fair market value, whether it is computers for schools or food for the hungry, and this is generally accepted as good for everybody concerned. Many industries get more favorable treatment than that, like the oil companies (and they're not exactly hurting), which get a "depletion allowance" for the petroleum that lies in the ground (appreciating greatly as it does so). But artists, uniquely, are arbitrarily limited to deducting the costs of their materials only; not the cost of their overhead, equipment, foundry services, education, or any of the other costs that went into producing their art. Is that fair, or even consistent?

Nobody's talking about being "owed a living" here. A tax donation is only useful if one has a tax liability in the first place; it does you no good if you're too poor to have to file a return. And if the museum didn't think a prospective donation was worth having, they are under no obligation to accept it. The tax code is commonly used to encourage things the government thinks are good (like owning a home, or digging oil wells), and to discourage things it considers harmful (like smoking cigarettes, or buying sugar from other countries). In this case, it would seem that art was in the latter category, as far as the bureaucrats of Washington are concerned. Of course, it's really just a matter of political clout - the mortgage, oil and sugar industries have it, artists do not, and we are punished accordingly. If we got together and lobbied for equitable treatment we might get it; the status quo is the result of our not having a collective voice that reaches the ears of our rulers.

Andrew Werby

As I mentioned in my earlier posts, the artists are not now being singled out for unfair treatment... it's the same rule that is applied equally to all individuals, be they artists, carpenters, or truck drivers. If, in fact, corporations don't have to abide by this same rule is another question. They seem to be able to pick and choose when they will be accorded treatment as persons (like demanding "rights") and when they can hide behind the corporate veil.

It would be very interesting to find out just where the corporate perks come into play here. Consider a corporation consisting of assembly-line artists cranking out "starving artist originals" the way they do in third-world countries. Could the corporation claim market value if it donated its products? If so, then just how small a corporation would be eligible? It only takes 3 people to form a standard corporation, so artist's co-ops would seem to be eligible.

Again, I don't believe there is anything in the tax code that singles out artists, so lobbying for "equitable" treatment won't help... it's already the same treatment everyone gets. This may come down to individuals versus corporate clout, but it's not about artists per-se. We'd *all* like to be able to deduct fair market value for donations of our labor or products!

Best regards,

Bob Masta DAQARTA v3.50 Data AcQuisition And Real-Time Analysis

Scope, Spectrum, Spectrogram, FREE Signal Generator Science with your sound card!

[There's a difference between a volunteer, who contributes labor to a cause, and an artist, who contributes a product. An artist is generally considered a manufacturer by the government; they have to pay sales tax for retail sales, for instance, while selling ones labor is exempt from that (at least here in California). If a carpenter owns his own cabinet shop, and donates a cabinet to a non-profit, it would be valued at full market value, unless he called it "art". There's nothing that restricts this to corporations; if you, as an individual, donate your car to charity, you get whatever they can sell it for as a deduction. (It used to be Blue Book value, but they changed that...)] [I'm afraid you just made this up, Bob. It's owner-made art that's being discriminated against here, not individuals or non-corporate entities. Under current law as I understand it, if the corporation is considered the author of the art, then all it could deduct would be the cost of materials. But if it structured itself as an "art collection corporation" and bought the work from the artists, then it could claim fair market value if it donated it to a non-profit.]

Andrew Werby

Please refer me to the relevant sections in the tax law that single out artists. As far as I am aware. the tax laws for individuals do not allow you to deduct for donations of your own labor, whether that is volunteer labor or labor that went into a product like a cabinet. It has nothing to do with whether you own your own shop, or whether you are considered a manufacturer.

Look under "Contributions You Cannot Deduct" on page A-8 of your 1040 Forms And Instructions 2008. It specifically lists "Value of your time or services". You are allowed to deduct only expenses you incurred, such as cost of materials. These rules apply to all individuals, and have been this way for at least as long as I have been filing Schedule C and other business-related tax forms (over 20 years).

I wasn't "making this up" I was *asking* if were the case for corporations, because I have never looked into corporate tax law like I have had to look into personal tax law. I had never heard that a corporation can claim market value if it donates its products, as you claimed in your prior post, but it sounds dodgy. If Chevy donates a new truck, would they be able to claim list price? I certainly doubt it.

On the other hand, they may be able to claim the cost of materials and labor, because the corporation has to pay for the labor. That would be fair... just as if you as an artist donate a piece that you paid someone else to build a base for, you could donate the cost of your expenses, including the other person's labor.

You example of the "art collection corporation" is also true for individuals: If you buy something that you then donate, you can claim market value. In fact, I don't think you even have to buy it, since the IRS regulations refer to "used items", but don't stipulate that you had to buy them. Presumably this means family heirlooms would qualify, even without a paper trail. But deductions over certain amounts must have appraisals.

My point is that there is nothing in the regulations (as far as I've seen) that singles out artists. It's not "owner-made art" that's being singled out, it is "value of time and services". It's the exact same rule that we all have to observe.

Best regards,

Bob Masta DAQARTA v3.50 Data AcQuisition And Real-Time Analysis

Scope, Spectrum, Spectrogram, FREE Signal Generator Science with your sound card!

Well you're right. Since digital, computers, lasers, fiber optics, artifical intgelligence, internet, plastic, robots, and satellites, were all invented in a large part because artists have always taken the view that pedestals themselves are a form of art.