The IRS issued a warning to taxpayers about art donation schemes that are targeting high-income taxpayers. These schemes encourage taxpayers to buy art at a “discounted” price, frequently with added services from the promoter (shipping and setting up the appraisal). After the taxpayer waits over a year, they will then donate the art piece at an inflated fair market value, which is significantly higher than the original purchase price. This is the amount that the taxpayers will use as the deductible charitable contribution on their tax return. The IRS listed a few warning signs for taxpayers to look out for in this release, something that they should also consult with their Florida CPAs. Red flags include being urged to purchase multiple works of art from the same artist that have little or no market value, and the promotor encourages the use of a specific appraiser. To stay updated with the latest tax-related news and update, always consult with your accounting firm.
News Release IR 2023-185.
Source:
October 17, 2023—No. 2023-20
PPC’s Five-Minute Tax Briefing
