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ItsDLEVY
04-14-2008, 12:37 PM
I'm on the committee planning a fundraiser for the youth group I used to be involved with. A local artist is donating his services to draw an original piece for the invitation to our event. I told him I thought this could be a tax-deductable "in-kind" donation (we are a 501(c)3 organization), but he didn't think so.

I know there are a ton of artists here who make donations of artwork to charities all the time. Can anyone shed some light on this?

Thanks

Taxman
04-14-2008, 12:39 PM
No deduction is allowed for the donation of labor to charity, only for out of pocket costs associated with such labor.

ItsDLEVY
04-14-2008, 01:04 PM
No deduction is allowed for the donation of labor to charity, only for out of pocket costs associated with such labor.

But if someone else were to buy the artwork and then donate it to charity, they could take the price of the art as a deduction?

Taxman
04-14-2008, 04:11 PM
But if someone else were to buy the artwork and then donate it to charity, they could take the price of the art as a deduction?This would depend on how the charity in question is going to use the artwork.

If one paid $500 for a piece of artwork and donated it to be sold in a thrift shop, you are looking at a very minimal deduction of roughly the amount it would be sold for.

If the artwork was going to be used to decorate the offices of the charity, then probably the deduction might well be what was paid.

If it is a valuable piece of art one may be able to deduct much more than what they paid if they follow specific rules and get a certified appraisal.

There are many variables which could come into play. In the original scenario, it is treated as labor though. That sort of donation never yields a direct deduction.

ItsDLEVY
04-14-2008, 06:58 PM
Cool. Thanks for the explanation. (This doesn't seem very fair to artists on the part of the government, but I suppose the government is rarely fair to artists.)

Taxman
04-15-2008, 04:41 PM
Cool. Thanks for the explanation. (This doesn't seem very fair to artists on the part of the government, but I suppose the government is rarely fair to artists.)Everyone's labor is treated the same for this portion of the law.