If you are an art collector interested in giving a piece of art to a charity, what factors should you consider in order to maximize your income tax deduction?
Short Answer: If a person as a collector contributes highly appreciated art purchased and held over one year to a qualified public charity and reports the contribution along with a supporting appraisal (if the art exceeds $5,000.00 in value) the person will avoid recognizing the built in capital gains, avoid paying inheritance and estate taxes and the person will be able to deduct the full fair market value of the donation as of the date of the contribution.
Long Answer: The Tax Code encourages the contribution of art to tax exempt organizations by allowing deductions against income for the gift. The size of the deduction will depend on several factors.
