Our newly formed artists for legal rights group needs some tax advice. We have created an unincorporated network of photographers which hasn’t received tax-exempt status. We have conducted several sales of our photos for the benefit of legal rights groups. All the money we raise goes to a public charity that chooses the groups to receive funds. The charity actually runs the sales and has done additional fundraising to match the money we raise. How do we measure the charitable contribution deduction available to the photographers and the purchasers of the photos? –By email.
This sounds like an important and valuable project, but unfortunately for the participants not one that will yield much charitable deduction.
An artist, whether a photographer, painter, ceramicist, author or other creator, who creates the donated work is entitled to claim a charitable contribution deduction only to the extent of the artist’s costs in producing the work. This includes things like the cost of the film (or computer chip) on which the picture was recorded, the cost of the canvas or paper on which the picture was made visible, and the cost of the frame if there is one. The artist is not entitled to claim a deduction for the value of the completed artwork or the value of the idea or the personal services in bringing the work into being.
Since more than 90% of all taxpayers use the standard deduction for their personal tax return and don’t itemize their charitable contribution deductions, most artists are not likely to receive any tax benefit from the contributions here. Even if they want to claim some or all of the new $1000 per taxpayer charitable deduction available for non-itemizers starting in 2026, that deduction is available only for contributions “in cash,” not for in-kind contributions like photographs.
The purchaser of the photos is also likely to be shut out of a deduction. A purchaser of stuff from a charity is able to deduct only the amount of a purchase price that exceeds the fair market value of the item purchased. It sounds like you are setting the price for the photos and the purchasers are paying it. That is the textbook definition of fair market value, the amount a willing purchaser is willing to pay to a willing seller with neither party under any particular pressure to make a sale. If that is the case, there is no difference between price and value, and, therefore, no deduction.
If the charity wants to set a reasonable value for the photos and auction them off, it might be possible that a purchaser would pay more than fair market value and claim a deduction. But it is also possible that some pictures won’t sell for the “market value,” or won’t sell at all, so that the charity comes out with less money after the event. The administration of an auction may be more trouble than it is worth.
It is good that the sale is run by the charity, because if the artists or your non tax-exempt group were to run the sale, there wouldn’t be any charitable contribution issue because there would be no transaction with a charity. If the artists sold the photos directly, they could give the proceeds to the charity and claim a deduction for the amount they give. But they would also have to declare the income they received from the purchaser, so at best, the deduction would offset the income. It would hurt them economically if they don’t itemize their federal tax deductions or if they have to pay state or local income or gross receipts taxes that don’t recognize a deduction for charitable contributions.
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