Charity auction portrait donations and taxes

[Debra Jones]

My understanding is that you can only deduct your expenses. If you were a bricklayer and donated a patio you can only deduct the cost of bricks and mortar, for which you have a real value and receipts, but you are on your own for the labor.
In my state, and I have attended two seminars on both problems, the city wants sales tax on portraits because there is a lot of art income. It is specifically noted. The state has two points of view. It is a tangeable good, so it should be taxed, but since it is commissioned, as in the client decides size, subject and materials, it is a service and only declare the service of painting it as income.

If you donate $200 to an auction and deduct it, and the buyer donates $150 to buy it and deducts it, there is not a real market value (and somehow both of you are deducting the same actual goods) IF you give the picture to your accountant and a bunch of brochures, and he tells all of his clients to go get a painting done and hands out a card with every tax return, the painting is a business expense, as a display piece would be, for advertising and a whole different ball of wax.

Well, that is how I understand it and I am sure some one else will set me straight soon.
dj*

[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