Donate Art to Charity and Potentially Deduct More Than Your Cost Basis
It might be several weeks yet till the 2007 tax year filing deadline in mid-April, but if you intend to donate art to charity and claim a deduction for charitable giving, you only have a few days left to act. Your art donation must be made by the end of the calendar year, so act now!
This is a charitable donation that can help not only the beneficiary charity, but yourself too. The actual cost basis of the artwork has no relationship to your deduction; you can deduct the fair market value of the artwork that you donate to and IRS-approved charity.
So if you bought the artwork some time ago and it has appreciated in value, you get to deduct the appreciated value from your taxable income, not what you paid for it (your cost basis).
Or if you can acquire art at a cost that is less than the appraised fair market value (FMV), then you can deduct more than you are out of pocket.
One significant catch that you need to be aware of, however, is that you must have owned the artwork for a minimum of 12 months to qualify for the deduction.