The art of deducting charitable contributions
If your business is art and you donate a work, you can only deduct the cost of the work's creation - not its fair-market value.
(FORTUNE Small Business) -- Dear FSB: In a previous question you addressed charitable contributions. Here is my issue: if an artist donates a piece of their art to a museum, can he take the deduction at cost plus 50% of fair market value?
- Cindy Lane, Santa Fe
Dear Cindy: Sorry, no can do. If you donate your time and talents to an art museum, you will only be able to collect on money that you spent to create the artwork, not for the value of the work itself.
John Stancil, a CPA and accounting professor at Florida Southern College says deductions are limited to out-of-pocket expenses, such as paints used to create the work, the canvas and frame. And, if the work was a contribution of services, then only the expenses laid out for those services can be deducted.
"That 50% of fair-market value is not correct," confirms Frank Moschiano, also a CPA in Albuquerque, N.M.. "When you donate something you made yourself, you can only claim deductions for the cost of the materials used and maybe even the mileage you used to get your artwork to the gallery."