To be accurately taxed, an artwork needs to be accurately valued, and the owner who has to pay the tax can’t be expected to provide the last word. When an artwork is sold outright, the Internal Revenue Service needs no help in determining how much to tax; it has the purchase price and the sale price and it knows how to subtract. (The maximum federal tax rate on profits from the sale of art and collectibles is 28 percent, higher than the 15 to 20 percent for stocks.) Things get trickier, however, when an artwork passes to an heir or is given to a museum. The agency still needs to know, as of the date of death or donation, how much the art is worth, but without a current sale price that figure can be debatable.
Article source here:Arts Journal
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