What is the definition of fine art in accounting/tax terms?
Artwork can be described as objects that are with visual content and have an aesthetic value. Examples include collectibles as well as fine arts, such as paintings, drawings, prints, sculptures and photography. What are some of the tax ramifications of donating fine art? Generally, a work of art is considered capital gain property rather than ordinary income property. As capital gain, its donation can be deducted from your taxes at full fair market value as long as certain rules are met, including the related-use rule, and that the value does not exceed 30 percent of adjusted gross income (AGI). In this case, any excess deductibility can be carried over the five following years. It only qualifies for ordinary income when: • It is created by the donor. • It is given to the donor as a gift from the creator. • It is the inventory of a dealer of that type of item. • It has been owned for less than a year. What happens if the art meets one of those four ordinary income definitions? If you d
