How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Robin D. Your Own Question

Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7252
Experience:  15years with H & R Block. Divisional leader, Instructor
Type Your Tax Question Here...
Robin D. is online now
A new question is answered every 9 seconds

I am donating art works which were gifted to me 10 years ago

Resolved Question:

I am donating art works which were gifted to me 10 years ago to a
qualified 502(c)(3) charity.
What is my basis for income tax itemized deduction purposes?
Anotherwords, can I deduct the fair market value of the art works
as of the date I make the donation?
Submitted: 12 months ago.
Category: Tax
Expert:  Robin D. replied 12 months ago.

Robin D :

Hello and thank you for using Just Answer,
Your basis in the art would be it's fair market value on the date of death when you inherited. The amount for the contribution would be it's appraised value when you make the gift. If the value is less than $5000 not written appraisal need be send with the return. If it is valued at more than $5000 you need to send a copy of the written appraisal.

Robin D :

Of course if the value is more then $50,000 you would need to request a statement of value from the IRS

Robin D :

The exact steps you would need to take are really dependent on the value of the donation.

Customer:

This is not right!! I said that I was GIFTED these works of art, they were NOT inherited.

Robin D :

If gifted to you then your basis is whatever the giver's basis was, so sorry to imply a death in the basis for you.

Customer:

Let's just clarify please.

Customer:

I take itemized deductions (don't worry about exceeding 50% of AGI, etc.,

Customer:

that is not involved. let's say the value of the art was $20,000 when given to

Customer:

me, and now it is $25,000.

Customer:

What is my deductible amount on Schedule C??>

Robin D :

$25,000 and you would be required to send a complete copy of the appraisal with your return

Robin D :

The Schedule is A (just to be clear)

Customer:

Right, Schedule A - So the deductible amount is the FMV at the time I

Customer:

make the gift to the qualified charitable organization?

Robin D :

Yes, but without the written appraisal (because of the value amount) it would be disallowed. The written appraisal would be required.

Customer:

Don't worry about written appraisals - I have them for both the time of

Customer:

the gift in 2003 and now in 2012. In your earlier answer you said

Customer:

the deductible amount was "the giver's" basis - By "giver"

Customer:

do you mean me or the person who gave me the gift?

Customer:

Sorry 2013 is the current appraisal

Robin D :

That is not the deductible amount that is merely your basis. When someone gives something to you you retain whatever basis (purchase amount) they had in the gift.

Robin D :

When I said giver in that statement I was referring to the person that gave you the art.

Robin D :

Your deduction is it's appraised value on the date of the donation.

Customer:

OK, got that. But putting aside any limitations on charitable deductions

Customer:

otherwise, if it appraised at $25,000 today, is that my Schedule A
deduction??

Robin D :

Yes

Robin D :

I know you stated that you wanted to put aside any limitations but there is one more important issue when a donation such as this is made. If you are donating the art for the charities use (such as to a museum to exhibit) then your deduction at appraisal price is fine. If you are donating this art and they intend to sale it then you may not use the appraisal amount as your deduction.


You would need to reduce the fair market value by any amount that would have been long-term capital gain
if you had sold the property for its fair market value. This generally means reducing the fair market value to the property's
cost or other basis.

Customer:

OK, thanks. Just to make sure I get this right, one more thing.

Customer:

Let's say the basis of the art in 2003 when it was gifted to me

Customer:

was $20,000 (fmv). Now I give it to an institution which is going

Customer:

to sell it (i.e., a school). FMV at time of gift is $25,000.

Customer:

SO, my deduction is $20,000, obtained by deducting the $5,000

Customer:

increase in value from the fmv on the date of donation. Right?? Thanks

Robin D :

Almost, you cannot use FMV when you were given you have to use the purchase price (or basis) of the person that gave the art to you.
If they bought it for $20,000 then held and gave to you your basis would be $20000 but if they purchased for less your basis is less and that would mean your deduction is less.

Customer:

Wow11

Robin D :

Yeah

Customer:

The person who gave it to me inherited the art, but she gave it to me as

Customer:

a gift while she was still alive.

Robin D :

felt I had to make sure you knew that limitation

Robin D :

Then her basis is still yours so you would have to do a little research

Robin D :

if you know the date of the inheritance by her.

Customer:

that is going to be very hard. But let's assume in the same scenario

Customer:

that she inherited it in 1990 and at that time it was worth $15,000

Customer:

FMV in 2003 when given to me is $20,000.

Customer:

FMV today when given to charity is $25,000

Customer:

Deduction amount for me on Sch A??

Robin D :

$10,000

Customer:

OK; think I know how you got that.

Robin D :

The inherited value for her would be your basis ($15000)

Customer:

So if fmv when she inherited was $20,000 and

Customer:

fmv today is $25,000 my deduction is $5,000. ??

Robin D :

Your deduction is $20,000 (it is the increase in value that is not allowed)

Robin D :

You get to start with your basis (because of the unrelated use rule)

Customer:

Sorry, I don't think that is consistent with prior scenario

Robin D :

Your basis is determined by her basis

Customer:

OK, so simply put since her basis is the value on the

Customer:

date she inherited the art works ($15,000) then the

Customer:

deduction is $15,000. Sorry if I am somewhat confused

Robin D :

No problem it is confusing

Robin D :

The main thing is the increase in value is not allowed on teh Schedule A

Robin D :

the* sorry

Robin D :

If her basis was $15,000 you get to claim $15000 on the A no matter what the FMV is (unless it dropped in value but let's not complicate further)

Robin D :

You cannot claim a charitable deduction on the amount that the art work increased in value while you held it.

Customer:

and also any increase in value while the person who gifted it to me held it

Robin D :

correct

Robin D :

You would have gotten a step up in basis had you inherited

Robin D :

then FMV when you got it would be relevant

Robin D :

Glad you came back so we could discuss that further

Robin D :

Your positive rating is always thanks enough.

Robin D :

I really enjoyed working with you – please feel free to request me again when you come back to ask another question.

Customer:

ok; thanks

Robin D :

Best wishes

Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7252
Experience: 15years with H & R Block. Divisional leader, Instructor
Robin D. and other Tax Specialists are ready to help you
Expert:  Robin D. replied 12 months ago.
Our chat has ended, but you can still continue to ask me questions here until you are satisfied with your answer. Come back to this page to view our conversation and any other new information.

What happens now?

If you haven’t already done so, please rate your answer above. Or, you can reply to me using the box below.

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.