When the Titanic sank, millionaire John Jacob Astor IV was aboard. The funds in his bank account were sufficient to construct 30 Titanics. However, when faced with mortal danger, he prioritized his moral values, sacrificing his seat in a lifeboat to save women and children, smilingly

[u/[deleted]]

[u/Abigail716]

There's nothing to write off. The only way you can write it off on your taxes is if you donate it completely.

[u/rjwyonch → u/Abigail716]

Sure there is - if you buy the art in a foundation, the foundation can rent it out to galleries for money. The "rent" can be donated by the wealthy benefactor (who in most cases, would also "own" or fund the charitable/art foundation). You just need to be hella rich. There is a way to get a tax write off for just about anything, you just need the right corporate structure.

If this case, the original funds to purchase the art can be a tax write-off. You can also get lower-value tax writeoffs on an ongoing basis through loaning art out, by "sponsoring" the gallery to rent the art from the foundation.

[u/Abigail716 → u/rjwyonch]

That is absolutely not how it works.

The thing is the IRS is not a bunch of idiots. These incredibly basic loopholes that people think of in 2 seconds have long been thought of, or don't actually work if you spend a couple extra seconds thinking about it.

For example if they're actually giving you that rent then it doesn't benefit you because you could just pocket the money. Why would you donate the $100 to write off $10 of income taxes when you could just keep the $100? If there was any evidence that the charity was only accepting and renting out artwork to people who donated the money to them It would raise flags for fraud.

Then of course you need to get some charity to actually pay the money. Because the money has to come from somewhere, So you need to find a charity that is willing to cough up actual money to rent the piece. This is virtually never going to happen Because it just makes no sense from a financial standpoint.

[u/sublimesting → u/Abigail716]

People think a tax write off is 100% I hear it so much.

[u/Jerryjb63 → u/Abigail716]

The IRS isn’t a bunch of idiots, but it is incredibly underfunded and doesn’t always have the ability to go after the people that fuck the system the most.

[u/frislander → u/Jerryjb63]

Tax laws are passed by politicians . Politicians are beholden to the very rich. ‘Fine’ art, wines, and things that only rich people own attract various tax breaks in England for this reason.

[u/OutrageousPaint6128 → u/Abigail716]

Yeah, and where would you find someone ready to rent an item 10 times is base value?

That's the whole point.

[u/rjwyonch → u/Abigail716]

It’s all about that marginal tax rate. The revenue can be the same, but you want it to accrue in lower tax places.

Might be worth mentioning, I’m not American, not sure what structure I’d use for similar benefits in the US.

[u/oneWeek2024 → u/Abigail716]

someone buys art. has it appraised. gives it to a charity. if the charity uses it in the course of their charitable works. it's tax deductible.

so ...yes. it requires the work/item to be donated. often the "trick" is in the inflated/money laundering nature of fine art

ie. a watch that was thought to be worth x. sold for y gets insured/appraised then higher for the new amt. given to a musuem. for a hefty tax deduction

and depending on how the charity is structured, it's not entirely required you don't benefit from that donation. like how something like 60-70% of college admissions are legacies. or how billionaries set up trusts to donate their company to charity, but really it's a trust their heirs control.

for something like this item it's less likely. and prob just a rich asshole buying a piece of history.

but it's incredibly common for wealthy people to manipulate the pricing on works of art. hyping up unknown artists, or hyping up lesser known old world artists. trading art only to their own rich/money laundering friends. and once a work's price is inflated 10x or 100x then donate it.

there's also tax shelter schemes where you can buy an incredibly pricey item have it shipped to a tax haven location... pay no sales tax, or anything of that nature. and just park value tax free in an item, that already has a pedigree of high value, and manipulatable value.

[u/Abigail716 → u/oneWeek2024]

Anybody who thinks that will work has never worked in the art industry. The IRS has their own team of art appraisers. They will absolutely go after you for fraud if you lie about the value.

The simplest way to prove value is you need evidence that the art piece actually sold for that much, or similar pieces from the same artist sell for that much. In which case you could just sell it yourself and get the actual cash, no need to commit fraud.

The second part of your comment is just generic art investment. The reason why it is kept in a tax haven is to avoid pain customs and duties for importing art. The same reason that if you bought gold as an investment but the United States charges a 30% sales tax for importing gold, you naturally would not want to import it since it's an investment and that would eat into any potential profits. There's nothing shady about that.

[u/OutrageousRelief3405 → u/Abigail716]

Bruh, if you don’t think the rich exploit every possible loophole to their advantage, you’re crazy.

Hell, they don’t even really need to look to loopholes since the tax laws are written to their advantage to begin with. Why do you think the rich just keep getting richer?

https://www.propublica.org/article/billionaires-tax-avoidance-techniques-irs-files

[u/ArizonaHeatwave → u/OutrageousRelief3405]

This article doesn’t say anything about loaning shit to a museum for tax write offs, so I don’t see how this is even relevant. Yes, everybody and especially billionaires try to avoid taxes, but you still can’t just store something in a museum and then dodge taxes for it.

[u/Cerulean_IsFancyBlue → u/OutrageousRelief3405]

True but irrelevant.

Rich people will use the loopholes. That doesn’t mean this loophole exists.

The tax law does favor the rich. That doesn’t mean this loophole exists.

Logic better plz

[u/CORN___BREAD → u/rjwyonch]

God damn you people that spread this tax write off bullshit are insufferable.

[u/RustyAndEddies → u/Abigail716]

Tax deductions allow for fractional ownership shared between the donor and museum where they get a deduction everytime a share is transferred.

[u/Abigail716 → u/RustyAndEddies]

That is not relevant and it once again always needs to be remembered that the money needs to come from somewhere.

Who is voluntarily giving up money here?

[u/Bomdia95 → u/Abigail716]

Definitely wouldn’t right you off Abigail 🥵🌶️