Charitable Contributions of Artwork
A number of tax planning opportunities are available when gifting artwork. However, for donors who have not done their tax homework, several surprising results can occur. Know Your Donee: Related-Use Concerns The donor's knowing the donee is a critical component to a successful and tax-advantaged transfer of appreciated artwork. A critical step to achieving the desired result hinges on the concept of "related use." Because faltering on the related-use rule can unwind even the best tax planning, it is vital that the donor know the donee organization. When first established, a charitable organization has to apply to the IRS for approval of its tax-exempt status. This application states the reason or purpose for the charitable organization's existence. This reason or purpose can dictate whether the donor contributing property to the charity receives a deduction equal to the fair market value (FMV) of the property or receives a deduction limited to the cost basis of the