Charity auction portrait donations and taxes

[Garth Herrick]

I am interested in the ways artists can use donated portrait services to their advantage at tax time. I have donated to two high-end charity auctions last year, as well as two others this year. However, although the fair market value of my donations this past year were significant, I see they have very little effect on my taxes. There is good publicity and exposure, and possibly other commissions from this, but for tax purposes it seems like a waste of time and resources. For these months of effort, if I had stayed with only paying commissions, I would have come out in better financial health.

Does anyone have thoughts and experiences to the best ways to utilize donated art when reporting of taxes?

Thanks.

[Chris Saper]

Unfortunately the Artist-Museum Partnership Act, aka Artists Fair Market Valuation Bill failed to pass the House this past season. No guesses on whether or when it might resurface.

Also unfortunately, your client who purchases a painting from you for $5K and then donates it will receive his maximum allowable deduction.

Don't even get me started on this.

The only way to deal with this, I think, is to donate a gift certificate for a partial credit toward a commission, of for a less costly commission (eg charcoal portrait) that has yet to be done, where there is an opportunity for you to realize the balance/ upgrade outside the auction constraints.

[Cynthia Daniel]

I guess this gets into "our hours of work are not worth anything." It's the same with web design. For example, if I do a web site for someone and they refuse to pay me at the end, I cannot write that off as a loss. If I host a web site and the client doesn't pay me, I can't write that off as a loss either, even though it's essentially the same as rent.

One year when things were slow around Xmas, I decided to do a web site for the Portrait Society of Atlanta at no charge. I knew they needed one and that they could not afford to pay someone. I had to get a statement from them saying I donated a web site in order for it to be deductible. I couldn't deduct the value of my hours. The whole thing is ridiculous and illogical.

[Geary Wootten]

OH......DON'T "EVEN".........!!!!!!

This has been a bone of contention with me for eons, even in the sign business.

("Quotation" Alert!)

Bottom line is.....the "powers that be" do NOT really care for Artists ......."all things considered"........ Until of course it's time to honor themselves by getting us contracted to reproduce their selfish mugs in their "ivory towers" on their "hallowed halls."



Forgive my rant if this is not the ideal spot for this kind of venting.

-Gear

[Linda Brandon]

Originally Posted by Geary Wootten

Forgive my rant if this is not the ideal spot for this kind of venting.

-Gear

Rant away! I'm with you!

Garth,

The way I've been handling auctions lately is to auction off a two hour head and shoulders charcoal portrait sitting from life in my studio. I'm very specific about the "studio","two hour" and the "from life" part. This works for me because I really like working from life and I get a victim for whom I don't have to pay an hourly fee. I don't have to travel, do a photo shoot or torture myself with composition questions. I love getting to know people this way - I have had some amazing conversations.

I've discovered there's a world of difference between a hired professional artist model and a "real person"; that is, real people usually don't sit as well. This is especially true if the victim is a child.(Some artists use television as a distraction but I'm resisting this.)

The best case scenario is that people show up in my studio, see the oils hanging around, say to themselves "Hmmm... why not an oil painting?" In this case I give them a discount toward the price of an oil portrait instead of doing the charcoal portrait, although, come to think of it, I always try to do a charcoal head from life during a commission anyway.

The worst case scenario is that people don't bother to collect on the certificate, which can also happen.

By the way, I'm in contact with a lot of people who run local charities and I'm always amazed that NOBODY is aware of these horrendous tax laws which affect artists so adversely.

[Stanka Kordic]

Well, talk about rants...don't get me started...but started I have. I had one nightmare situation where the same family bid on my donations at 2 different auctions, one for each child. The horror!

The good part was they ended up having 4 children...

You are so right Linda about how absolutely CLUELESS the committees are about the tax laws!

However, despite my often dicey situations, auctions have provided my business the necessary kick start when I began to focus on portraiture. Now, I just offer pencil sketches to charities.

Wishing you all the best,

Stanka

[Holly Snyder]

I just wanted to clarify - is it the same thing, tax wise, to donate at auction a finished painting or a gift certificate towards a to-be-completed portrait painting? Are both of these non-deductible, except as advertising expense as Michele was advised?

I plan on participating in an auction for a private Catholic school. Again, do the same tax laws apply if it is not for charity?

Thanks,

Holly

[Debra Jones]

I agree, I would rather figure out a way to put all my charity to good use, but one of the problems with my taxes, is that, unless I want to pay my accountant a lot more, there is a general deduction for charity on the shorter form. I don't have that much income that it is WORTH the nit pick to put it into charity BUT I do have business expenses. They are real and this is an opportunity to expand my client base and it is the BEST advertising I do, so the deduction is higher and more realistic.
Check with your accountant. Honestly, the way I understand it, is that you can sell the painting to a client, and because they have the receipt, they can show it as a donation, but if you want a charitable deduction, you can only show the receipts for the canvas and the paint.... maybe you can bill yourself for the time you put in and deduct that expense. They want to see WHAT you donated and proof of the value. It is a better deal for you to do it as advertising, tax-wise and much higher karma to donate from the heart, not the pocketbook!
dj*

[Holly Snyder]

Hi Debra,

I haven't heard from you in a while, are you still painting portraits? Thanks for the information, I appreciate it.

Holly