{"id":1570,"date":"2014-10-07T06:16:26","date_gmt":"2014-10-07T13:16:26","guid":{"rendered":"http:\/\/www.artsjournal.com\/worth\/?p=1570"},"modified":"2014-10-08T18:24:27","modified_gmt":"2014-10-09T01:24:27","slug":"tax-deductions-for-artists","status":"publish","type":"post","link":"https:\/\/www.artsjournal.com\/worth\/2014\/10\/tax-deductions-for-artists\/","title":{"rendered":"Tax deductions for artists (updated)"},"content":{"rendered":"

\"operates<\/a>The New York Times<\/em> reports<\/a> on a court case involving whether an artist working for salary as teaching faculty can claim tax deductions of artist’s expenses (for supplies, travel, meals, etc) in excess of profits earned on sales of art. My understanding of this (tax people please correct me if I have this wrong) is that these net losses can be applied against salary and other earnings, thus lowering the tax owing:<\/p>\n

The I.R.S., which accused Ms. Crile of underpaying her taxes by more than $81,000 from 2004 to 2009, argued that based on several factors, such as her lack of a written business plan, her work as an artist was \u201can activity not engaged in for profit\u201d and that she could not claim tax deductions in excess of the income she made from her art.<\/p><\/blockquote>\n

There are two things to consider when reading such a story, things the reporter is likely to ignore.<\/p>\n

First, when a ruling is made, how are people likely to respond to the changed incentives? It is all very well to focus on the party in this case, Ms Crile, but this becomes a ruling for everybody<\/em>. So let’s imagine someone rather unscrupulous, who has a faculty position, makes art that is essentially unsaleable, but who likes to travel, visit exhibitions, furnish his studio with only the finest materials. And all of these expenditures could be deducted against his salary income. Something seems not quite right about that. The Times<\/em> story focuses on the political nature of Ms Crile’s art, that she is pursuing her art where the monetary returns are unlikely to be high. But what about an artist who is simply a bad artist, but who likes to live large?<\/p>\n

Years ago in Canada I remember a case that made the news, of people with high salaries – physicians in particular – making a purchase of a couple of goats, and declaring “I’m not just a doctor, I’m a farmer too! Shame, but this goat farm loses a lot of money. But I can deduct those losses against my income from doctoring.” No, I’m not saying Ms Crile is that doctor. But let’s keep in mind the possibility that some<\/em> artists will be tempted to behave just like that doctor.<\/p>\n

The second thing to keep in mind is how tax rulings for artists (or collectors, for that matter) are seen by taxpayers who are not in any position to claim tax deductions of various sorts – they work at ordinary low-paying jobs for a wage and that’s about it. The art world is not seen in the same light by them as by many readers of the Times<\/em> Art & Design Pages, or these blogs. Avoiding estate taxes<\/a> through complex transactions in art may serve a few people well, but the non-arts public can sense something of a scam about the whole thing. And ‘arts advocates’, those who want to build greater public support for the arts in the US, might ask themselves how helpful these stories from the tax courts are to their cause.<\/p>\n

UPDATE: Very helpful, detailed analysis of the Crlle case from Sam Brunson<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

The New York Times reports on a court case involving whether an artist working for salary as teaching faculty can claim tax deductions of artist’s expenses (for supplies, travel, meals, etc) in excess of profits earned on sales of art. My understanding of this (tax people please correct me if I have this wrong) is […]<\/p>\n","protected":false},"author":3,"featured_media":1573,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[26],"tags":[],"class_list":{"0":"post-1570","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-issues","8":"entry"},"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/10\/Goat.jpg","jetpack_shortlink":"https:\/\/wp.me\/p3dIW5-pk","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":4667,"url":"https:\/\/www.artsjournal.com\/worth\/2026\/03\/should-there-be-a-tax-deduction-for-donating-to-the-nonprofit-arts\/","url_meta":{"origin":1570,"position":0},"title":"Should there be a tax deduction for donating to the nonprofit arts?","author":"Michael Rushton","date":"March 10, 2026","format":false,"excerpt":"I was at a seminar yesterday given by Professor Philip Hackney of the University of Pittsburgh School of Law, given (via web) at the Marxe School at Baruch College, on \u201cTax Policy Toward Arts Nonprofits: Democracy or Plutocracy?\u201d It\u2019s a good question! 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It does cost money to run the place. However, because they are tax exempt, art museums already count the public as a major, indirect source of revenue. Required admission fees add\u2026","rel":"","context":"In "issues"","block_context":{"text":"issues","link":"https:\/\/www.artsjournal.com\/worth\/category\/issues\/"},"img":{"alt_text":"And everybody should have one","src":"https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/12\/pony.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/12\/pony.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/12\/pony.jpg?resize=525%2C300&ssl=1 1.5x, https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/12\/pony.jpg?resize=700%2C400&ssl=1 2x, https:\/\/i0.wp.com\/www.artsjournal.com\/worth\/wp-content\/uploads\/2014\/12\/pony.jpg?resize=1050%2C600&ssl=1 3x"},"classes":[]},{"id":1063,"url":"https:\/\/www.artsjournal.com\/worth\/2014\/02\/today-in-tax-advice-the-winner-takes-it-all\/","url_meta":{"origin":1570,"position":2},"title":"Today in tax advice: the winner takes it all","author":"Michael Rushton","date":"February 17, 2014","format":false,"excerpt":"The Guardian reports on Swedish tax incentives: The glittering hotpants, sequined jumpsuits and platform heels that\u00a0Abba\u00a0wore at the peak of their fame were designed not just for the four band members to stand out \u2013 but also for tax efficiency, according to claims over the weekend. 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The BBC reports: He proposed cutting 16% of its $200m (\u00a3119m) labour costs by changing work rules for the orchestra and chorus. 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