An Interview About Fine Art Donations and Taxes
Transcript: An Interview About Fine Art Donations and Taxes
Rob:
Hello everybody. Today is Wednesday, March 24th, and I am joined by Irina Leyva-Perez of the Valia Garzón Art Services team. Valia Garzón Art Services focuses mainly on valuation services, collections, strategic design, research and certification, art appraisal, downsizing for things like estates, art inventories, and other services upon request. Irina is an art critic and curator. She holds a bachelor's degree in art history from the University of Havana, a master's in liberal studies from Florida International University in Miami, and she is an art historian, art critic, and curator. So, without further ado, let me have Irina introduce herself and tell you a little bit about herself.
Irina:
Yes. As you will hear, my name is Irina Leyva. I've been in the business for over 20 years doing basically writings, critiques, exhibitions in museums, galleries, and recently I just venture on my own. I'm associated to Valia Garzón Art Services sometimes, sometimes I work on my own, but what we do together is art appraisals, art inventories, art consultancy in general, like we have our collectors who we help building their collection and switch things. Sometime people buy stuff on some point, and then they decide later on that their taste has changed or their interest. So we help them to accommodate their collections to their needs. Yeah.
Rob:
So today we're going to go over a bit about art donations and taxes. So we've prepared a few questions to go over and explain, and hopefully help any of you viewing or reading this below find more information on these things. So let me ask you a few questions.
Irina:
Sure.
Rob:
When is a good time to donate artwork?
Irina:
Well, anytime is good. I guess it's something like if you have a piece, sometimes you want to donate a piece, let's say to your university or college for the art collection, or you are downsizing. I have clients often that they reach to a point they want to move to a smaller place, let's say to an apartment, and they have a big house. So that's a good time to decide that you're going to donate some pieces to art institutions or something like that. Or you have estate that all of the sudden they find out they have a huge inventory of pieces. Some they sell, or sometimes the wills of people establish that they want to donate certain pieces to certain places. So that's when you can consider donating artworks.
Rob:
Okay. Awesome. And where are some of the places that people could donate their artwork?
Irina:
That's a good question. You can donate it to us. I will say previously to universities, cultural institutions that have an art collection, even charities that sometimes have auctions and sell them for the benefits, all of that. But you need to make sure if you, I mean if you're interested in having as a tax deduction, otherwise, you can do whatever you want, but if you're interested in tax deduction, you need to check that the receiving institution is a nonprofit organization and it is actually authorized to receive donations.
Rob:
Got it. That part sounds pretty important just to vet those places that you're going to be donating the artwork to. So, what else could be pretty important is what do you need for the donation?
Irina:
Yeah. You would need, as I was saying on the previous one, to check in advance, if the institution or place that you are selecting is actually accepting this kind of donations. We're talking about artworks. If you're donating money or something, it's a different game. But artworks, you need to check that these places at that point in time accepting the donations and you need to have your documents well-prepared. What kind of documents you will need for example, if you have a certificate of authenticity for the piece, especially if you are thinking in museums or important cultural institutions, they need to have the provenance. Its very important for them that they are not accepting any pieces that have any question on their provenance.
Rob:
Yeah. And what is the provenance documentation?
Irina:
The provenance documentation could be an invoice, it could be catalogs, letters, any documents that trace where this piece is coming from. It could be a collection. It could be the artist. You could have a letter, something. Now, if you are donating pieces that are on the valuable end of the spectrum, let's say expensive pieces, I will recommend to do provenance research because that will validate what you're doing, studying the story of the piece.
Rob:
Got it. So the provenance is a lot just like a history or a trail of the art and it just verifies and validates that it is what it is and the process it went through. Am I correct in asking that?
Irina:
Yes. Sometimes people don't have the documents. That happens very often. So in that case, it's kind of like you have to do the research provenance. Its really important, especially as I was saying for museums and institutions. There are many situations happening with pieces that people bought in good faith, but later on, something happened that it the piece belonged to somebody and there are disputes. We all have heard the stories about the Nazis taking pieces from Jewish families, and then they come up on auctions and things like that. So there is traffic with pieces, so all of that needs to be very clear. And I would say, this is off the topic, but since we're talking about this, if you are considering buying a piece or something, try to research what it's coming from, just to avoid any bad surprises.
Rob:
Yeah. Definitely better be preemptive and then find out something is not authentic down the road, or, like that example, was repossessed by a different party.
Irina:
Yeah. And you touched a very important thing: the authenticity, because this is something you need to have for, especially if you're talking about expensive pieces or institutions, they're going to request some proof of authenticity. So, yes. Mm-hmm (affirmative).
Rob:
So moving on to taxes, you had mentioned a tax reduction tax reduction.
Irina:
Yes.
Rob:
So when do you need an appraisal for your taxes?
Irina:
Well, it comes down to values. If your total value of your piece is 500 or more, you will need an 8283 form, which is a specific form for the IRS for art donations. And it needs to be signed and dated by a qualified appraiser for the IRS. Now, if your piece is 5,000 or less, an appraisal is optional, but you're always going to need the 8283 form, again, signed by a qualified appraiser. Now, if your art work is more than 5,000, then you are going to need an appraisal conducted and signed by a qualified appraiser. Otherwise, it won't stand for the IRS.
Rob:
Okay. And following up on that question, what makes a qualified appraiser?
Irina:
Hmm. That's a good question too. A qualified appraiser is somebody who is part of organization for appraisers, or has some competency in valuing the type of work that we're talking about. Remember appraisal also divide into like fine arts, antiques. They have different areas of expertise because it is impossible to go into everything. So I would say that if you're doing fine arts, try to find somebody who have experience in that field who have worked most likely on different categories, so they will know different type of artist, different type of arts, somebody who has gone through galleries or the process of selling or buying or authenticating. So its somebody who have some idea of the values of what you're presenting and also somebody who will know all the parameters that an appraisal should have, that if, otherwise, it will not be accepted, like for the IRS or insurance companies or some. They have certain points that have to be in the appraisal. Otherwise, it will not be valid. And also it needs to be somebody who is not connected to the piece, otherwise would be a conflict of interest.
Rob:
Yeah. Conflict of interest, for sure.
Irina:
Yeah. It could not be yourself if you're donating the piece or if it's your husband or wife or family member. So it needs to be sort of like an impartial view on the piece value.
Rob:
Okay. Irina, thank you for taking the time to teach me a bit more about donations and taxes related to art. I definitely learned a lot and there is plenty more information that you and the rest of your network and team can teach me and all our other viewers here. If you are looking for more information, visit valiagarzonartservices.com or if you wanted to find more about the forms that we were just talking about, the 8283 form, there's more information there as well, and don't hesitate to reach out and call Irina. If you have any specific questions or would like to learn more about art services yourself, the team is extremely receptive and they would love to hear from you. Thanks for your time.
Irina:
Thank you.