If you own a work of art that has appreciated, you might want to donate the item to a charity. Assuming certain tests are met, you’ll get a deduction for the full market value of your artwork and avoid capital gains tax. What tests?
Who. The artwork must be donated to a nonprofit public charity, not to a private foundation.
What. The item must be a capital asset, held for longer than one year. If you received the work of art as a gift from the artist, it’s not a capital asset and your deduction will be limited to the artist’s cost of materials.
How much. An unrelated, qualified appraiser must put a value on the artwork at the time of the donation. Anyone connected to the person or company that sold you the artwork can’t be the appraiser.
Why. The artwork must be suitable for use that’s related to the exempt purpose of the recipient. A donation of a painting to an art museum would qualify but not the donation of that same painting to a charity auction.
