Charitable gifts of artworks almost always present valuation issues. An appraisal by a respected, unbiased expert is key to substantiating a charitable deduction for a donated work of art. The Internal Revenue Service has its own experts: the Art Advisory Panel. Valuations of artwork exceeding $50,000 must be sent to the panel, though smaller claims may be referred as well.
When it comes to art, you have heard that beauty is in the eye of the beholder. However, have you heard that value is in the calculations of the appraiser? It is. And the IRS has a stable full of appraisers known as the Art Advisory Panel.
A recent article on WealthManagement.com titled “Charitable Gifts of Artworks Part 2” follows on the heels of part 1 of the same article and gets into the nuts and bolts of art valuations. At the outset, it is valuable to know that the Panel exists, but it is essential that you know in advance how to plan for it.
You see, since the value of anything is determined by the market for it (from gold to grain to stocks, and yes, art), you must prove the tax consequences to the IRS whenever you transfer ownership to any charity or other recipient.
Taxpayers by nature want a gift to charity to receive a higher value and a gift to a loved one to receive a lower value. The Art Advisory Panel is there to check your work, or the work of your appraiser, and be sure that the right taxes have been paid.
If you intend to give, whether to charity or others, then the Art Advisory Panel will need to be convinced of the value you set.
Reference: WealthManagement.com (August 26, 2013) “Charitable Gifts of Artworks Part 2”
For more information regarding Charitable Giving for residents in Lee’s Summit, MO, please visit my web site at http://www.stilleylaw.com/.