The end of the year is a few short months away!! Until then we have our kids going back to school, then multiple holidays……all making these months pass by quickly. Which also means these months are expensive for each household. There is a way you can get a Tax Deduction for this year: Non-Cash Charitable Contribution. If you have art you no longer want to keep, you are probably deciding on whether or not it is valuable enough to Sell? That is one way to increase your Finances; however, donating your artwork may be a better solution for you.
There are certain protocols to follow when donating your Art, but if you do it correctly you may be eligible to get a Tax Break on your 2023 Taxes!!.
Charitable Gifting: There are certain tasks You, the Donor will have to do before you can Gift. Don’t worry, it is a pretty simple process and it will not take as long as the Selling Process.
One of the first things you will need to do is find the Organization you want to Donate to. (This can be done before or after the appraisal ~ check with your CPA.)
- Find the Organization you want to be the Doneé.
- Have one of their Board of Directors sign an acceptance letter, stating they are accepting the Artwork.
- They will also need to state, at some point, that they acknowledge the Value given to the item by the appraiser. (Note, if they do not state this and they Auction off the item at a lesser value, you might only end up with the deduction for the auctioned value, not the appraised value!!
The other thing you will need to do is have your Fine Arts Appraised.
- You have to hire an Accredited Appraiser to provide you with an Appraisal Report. (This is where WE come in!)
- The first thing the appraiser does is Evaluate the item/s you wish to donate. This means we will view your artwork in person where we take notes, dimensions, and photos. This will then help us move forward with the research in order to provide a proper and thorough Appraisal Report.
- Once we, your appraiser, have given you the completed Appraisal Report, then you move on to the next thing, you, the Donor, has to accomplish.
The second thing you have to do is give the Appraisal Report to your CPA.
- Your CPA will help you understand all the differing rules and regulations the IRS insists upon in a non-cash Charitable Contribution.
- Deliver the completed Appraisal Report to your CPA.
- They will fill out the IRS form #8283. Once they have completed their portion, they will then scan and email me the form. We will sign it and scan it back, promptly, to your CPA.
- From there the rest is up to you and your CPA.
If you would like to learn more about the Charitable Contribution process, please email us at coronadoappraisalsllc@gmail.com or call us at 619/929-6192. NOTE: The donation needs to take place no later than December 31st, 2023, in order for you to get your Tax Break for this year.
IRS Regulations: There are a few IRS regulations You should remember:
- Your income tax charitable contribution donation of paintings, antiques, and other objects of art, for which you claim a deduction of more than $5,000 must be supported by a qualified appraisal and a Form 8283.
- You can only give to an Organization that is Qualified with the IRS. These are non-profit organizations, such as religious, charitable, educational, scientific, literary in purpose, or that work to prevent cruelty to children or animals. (Publication 526, Page 2) Your item must connect with this organization in some manner. This is the Newest Tax guideline.
- Your Deduction for Contributions on Fine Arts should be Supported by a written appraisal from a Qualified and Reputable source.
- You must have a Completed Appraisal on the gifted item, from a Qualified source in the Art Industry, in order for the IRS to allow your Tax Deduction. If you were not aware of this at the time of gifting, then make sure you get the artwork appraised no later than 60 days after the gifting. Once the 60 day grace period has ended, you may very well not be able to take your Tax Deduction.
Please note; we continue to Follow and Stay Updated on all Regulations where Fine arts are concerned, from the I R S to the International Society of Appraisers and USPAP (State Guidelines). We stay updated not only for us, but for you as well. When you hire us to do an Appraisal or Restoration, then you can rest assured that we know what we are doing. We will take good care of You.
Please be sure to speak with your CPA advisor on everything you have read here in our blog. We are not accountable for the IRS not accepting your Form 8283, nor giving you the Tax Deduction you were hoping.
References: https://www.irs.gov/uac/about-publication-526 and https://www.irs.gov/pub/irs-pdf/p561.pdf.
