Client received an art collection as a gift, had it appraised at about 10,000. Does he get the appraised value as a contribution deduction or is it limited to the basis in the gift that is the basis of the giver?
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John -
Assuming the artworks were donated to a 501(c)(3) organization, the donor may deduct the property's FMV, up to a maximum of 30% of his "contribution base" ... generally his AGI. (Code §170(b)(1)(C))
The donor may also make an election to deduct only his basis in the donated property, in which case his contribution base then becomes 50% of AGI.
If the donee organization sells the donated property shortly after receiving it, the donation is also limited to basis.
Finally, for property donations valued at more than $5,000, the donor must obtain a "qualified appraisal" (one meeting specific IRS requirements) and attach to his return information about the property and the appraisal. (Code §170(f)(11)(C))Roland Slugg
"I do what I can."
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