Writing Off the Warhol Next Door

[fiatmoney]

Here's a neat trick:

- Buy Painting X1, X2, X3, ... for 10K apiece.

- Your friend buys Painting Y1, Y2, Y3, ... for 10K apiece.

- You buy one of your friend's paintings for 1M. He does the same.

- Holy cow! "Market price" for the rest of your paintings is now 100x greater than it was yesterday.

- "Donate" as many of the paintings as you wish to the museum next door. Deduct the full value (now 1M) on your taxes.

[iolothebard]

You should see the Romney Family's IRAs. 30k/year somehow has magically grown to 87 million. Nice eh?

[pkaye]

Beyond some low value, the IRS expects you to get an independent evaluation of fair market value for tax deduction. I'm sure you would get audited otherwise.

[amalag]

Wow didn't realize it was so simple.

[pdabbadabba]

It seems like there is an obvious way to close this loophole: require the taxpayer to realize the $990,000 capital gain. Can anyone explain if/why this is not already required?

[jim_greco]

The IRS has never thought of that one.

[discardorama]

Simple fix? Restrict the tax writeoff to $100/visitor/year.

[arjunnarayan]

That's a surprisingly simple fix that makes a lot of sense. There's clearly a public benefit to having more visitors (since the tax break is explicitly to encourage things that are of the public benefit). I like it.

[2arrs2ells]

Startup idea: Fake museum visitors at $10/pop!

[rbcgerard]

unintended consequence: important works are only sent to the largest museums in the largest cities where traffic flow can support it the tax write off.

[rdtsc]

To write off $1M you'd need 10000 visitors/year. Contract a startup that gathers & shuttles fake visitors in at 1000/day for 10 days a year.

[hristov]

Somebody should start a website that catalogs all of these museums. Then we the unwashed masses should all visit them. Then we will all find out whether these are actual museums or just tax avoidance schemes.

[borkt]

http://www.pier24.org

Great Photography collection in SF that meets this criteria it seems. Definitely worth a visit.

[bootload]

"... Wealthy collectors, of course, have long saved millions of dollars in federal taxes by donating art and money to museums and foundations. But what distinguishes Mr. Brant’s center and a growing number of private tax-exempt exhibition spaces like it is that their founders can deduct the full market value of any art, cash and stocks they donate, even when the museums are just a quick stroll from their living rooms. ..."

Sounds suspiciously like money laundering. You don't think all that expensive Art, is really worth that amount do you?

[im2w1l]

In what way are paintings educational? Don't get me wrong I like looking at them, but I can't say I have learned any transferable skills, or that they've made me a better person or anything like that.

[lbotos]

Depends on "what" you are being educated. If you are a designer, painting can be very educational as they contain:

- Line

- Color

- Form

- Space

Studying the use of these elements can make you a better designer for sure.

If you are a film maker, you make study an artist's use of color (Monet, Mondrian) to get inspired for your color palette. You are right that studying paintings won't magically make you a better person or make you a better at basketball but in the realm of creation, studying paintings are definitely valuable.

[matt4077]

Education isn't just about "transferrable skills", at least not in the sense that you can attach a $ value for it. Society is advanced by two broad categories: science & technology, and arts & culture. To deny the benefit society reaps from a culturally educated population is insane.

[mathattack]

Inspiration? http://www.washingtonpost.com/blogs/comic-riffs/post/steve-j...

That said, I'm not a fan of tax incentives for art from a government that's borrowing money, as one definition of art is that which has no function.

[gallerytungsten]

Have you ever tried to copy a painting? Try it sometime, you'll learn a lot.

[jeangenie]

What makes you think paintings are supposed to be educational? What properties must something fulfill to be educational?