Legislation Affecting Artists

[Claudemir Bonfim]

I've just received an email from David Darrow and I thought it might be useful for you guys in the U.S.

Here you are...

"Please forgive the 'business' nature of this e-mailing. I just want to ask for your support in one area of the Arts in the USA (for voters only).
Actually I am not a huge fan of the National Endowment for the Arts (NEA) or other government art-related programs, so I often balk at mention of "The Arts" when related to legislation, but this particular Bill that I would like you to support just makes sense.
Artists' Deduction Bill
Did you know that if a non-profit organization contacts me and asks me to paint a painting for them and donate it to them so that hey may raise funds, I instead consider whether or not I'd rather just write them a check?
This is because the current tax laws will only allow me a tax deduction based on the cost of materials!
Example: I donate, say, a 30" x 40" painting, which will take me a month or more to produce, and which I might normally sell for $6,000 - $10,000 if commissioned, and all I can deduct from my taxable income is the cost of materials used in the physical painting: Stretcher bars ($50), Linen/Canvas ($30) and paint ($ ??? maybe $30? how do I figure that out?). So, I work for a month or more and give the painting away to help a cause I want to support, and then I get to deduct $110 from my taxable income.
Sweet deal.
Not!
The Artists' Deduction Bill will finally allow artists to deduct the fair market value of their donated work. If Ford or GM can donate a vehicle and write off the Retail Value as a deduction, why shouldn't I be able to lower my tax burden by deducting from the total of my taxable income the amount of money I did not earn that month in my charitable gesture?
The Bill does not begin the lobbying process until March, but I ask you, my friends, to please voice your support of this Bill by taking 2 minutes of your time and visiting the legislation page at the Art Calendar website (for more info) http://www.artcalendar.com/article.asp?ID=72 , or go directly to the form ( http://capwiz.com/artsusa/issues/ale...521951&type=CO ) you can fill in with name and address, where a copy of your support in an editable pre-written letter will be auto-mailed to your Congress member(s).
Thank you! --David
PS- Please consider FORWARDING this to message boards, other groups and/or friends you know who are likely not on my mailing list. Thanks!"

[Julie Deane]

How ironic, to be notified of an American bill via an international artist.
Thanks so much, Bonfim. Let's all take action and have our voices heard to get this inequity fixed!

[Richard Bingham]

Originally Posted by Julie Deane

. . . Let's all take action . . .

With all due respect, why ??

Consider that adding yet another layer of stipulations to the already impossibly complicated tax code is not exactly a good thing, and a sword that can impose a standard for "market value" will undoubtedly cut both ways.

This instance has precedent in that, should a surgeon or attorney (e.g.) who earns $250 per hour) "donate" time to a benevolent cause, they may deduct attendant expenses such as mileage, or per diem compensation in doing so, but NOT their time. This is a good thing. When it comes to filling bowls in a soup kitchen, or swabbing the deck in a halfway-house, a professional's expertise is no more valuable than someone who earns minimum wage. In some cases, maybe it's less.

The issue is hardly a question of import to most art professionals anyway . . . if you want to donate a painting, do so freely, with good will, rather than thinking of it as a tax dodge. The difference in what you pay on April 15 will be pennies, anyway.

The other side of this coin is that in truth, this kind of "donation" is possibly the worst thing artists can do in terms of maintaining "real" valuation if there exists an active market for their work. Invariably, a piece is "valued" at less than the dollar-six-eighty spent on materials . . . (been dere, done dat . . .) Let the hobbyists and amateurs donate their paintings.

[Alexandra Tyng]

Thanks, Bonfim. I agree with Julie, with no disrespect to you, Richard.

If X buys my painting for 10,000, X can donate it to an organization and report it to the IRS as a $10,000 deduction. But I, the artist, can't deduct more than the cost of time and materials, even though I'm not just donating time and materials, I'm donating an actual object that I can prove to be worth $10,000.

I have donated pieces in spite of this, and I do so to benefit the cause. Even if I did get a tax break I wouldn't feel differently about it. A few years ago I donated a portrait to the JDRF and got nothing except the pleasure of knowing I truly gave something to help diabetes research. The people who bought the portrait paid the money but they got the portrait in return, as they would have if they had simply commissioned me to do it, except we both knew the money was going to a charitable cause. The artist is the one who actually gives something without getting anything in return.

Many artists cannot itemize deductions because not enough percentage of their income goes to donations. Why should an artist not be able to take advantage of itemization even though they have donated works totaing a sizable portion of their income?

I personally haven't noticed that my donations have had a negative impact on the value of my work.

Why should I feel bad about adding one more tax law to the already complicated system? Actually I think this would be a tax reform.

[Richard Bingham]

Originally Posted by Alexandra Tyng

. . . no disrespect to you, Richard . . . Many artists cannot itemize deductions because not enough percentage of their income goes to donations . . .

I rely on that, Alexandra - none taken! That's why this is such a pleasant forum.

This just in . . . I checked with my tax professional, and was told that you can take the full price of the painting as a donation so long as you can substantiate a real market value for the piece. This precludes hobbyists from claiming "blue sky" value for their work. Again, not a bad thing.

And, a reminder (from my tax pro) to account for all aspects of the cost of doing business . . . we tend to miss a lot of 'em because of the peculiarities of our profession.

As for feeling bad, naw. Don't feel bad . . . and I agree, since "reform" might be even worse than what we have as a tax system, amendments where necessary are better than nothing, and surprisingly, the IRS is responsive to such pressures.