An Artistic Deduction
By admin on Oct 7, 2014 | In Visual Arts
Who wants to take on the IRS? Not too many want to tangle with those folks. But one artist did just that, and she won a battle that could be a significant victory for all artist taxpayers in the U.S.
Visual artist Susan Crile found herself in the IRS's crosshairs when it said Ms. Crile owed tens of thousands of dollars in back taxes because her deductions involving her paintings didn't stand up to the IRS's test for an actual business expense. Because Ms. Crile made relatively little money from the sale of her art, while she drew the bulk of her earnings from her position as a college professor, the IRS contended that her artwork was a hobby, and, therefore, the outlay of cash related to the creation of her art didn't qualify as deductible business expenses.
However, the U.S. Tax Court doesn't see it the IRS's way. In a ruling handed down last week, a judge on that court said Ms. Crile met her burden of proving she created art "with an actual and honest expectation of profiting from it." The fact that she actually didn't earn all that much didn't disuade the judge from ruling in her favor.
That ruling should come as a big relief to many artists who, try as they might to sell their works for a profit, have never really hit the big time with their art -- this despite the fact that they might be investing a significant amount of money in the attempt. For the time being, those artistic business investments might be deductible.
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