According to IRS Regulation 561, all artwork donations must meet specific criteria: The IRS mandates that a charitable contribution of an item with a fair market value of more than $5,000.00 must have a "qualified appraisal" by a "qualified appraiser" attached to your return. For items valued at $50,000.00 or more the IRS will submit the appraisal to the Art Advisory Panel for additional scrutiny and evaluation.If possible, choose to donate a property whose value would be assessed as a long-term capital gain rather than ordinary income.
Remember the "IRS related use rule": Make sure your gift is intended for a qualified public charity whose mission is in alignment with art . Typically, art contributions are made to qualified organizations that are museums or educational institutions that have public charity status. The tax benefit of the donation could be significantly compromised if the charity sells the item or does not make it available for viewing for a minimum of 3 years following the donation.Request an official deed of gift from the qualifying charity, describing the property and specifying the date of the donation. Be sure to share your intentions to make a gift with your CPA or tax professional and submit all materials for his or her review prior to posting your tax return.
Qualified fair market value appraisal reports for IRS charitable contribution are among the most demanding documents an appraiser is asked to produce. They require considerable time to prepare and must include specific elements to be accepted by the IRS. Most importantly, you should select an appraiser who has established expertise in the specific type of artwork you are intending to donate and is member of an accredited appraisal organization.