S14. Our registered charity received a donation of an artist's painting. How do we determine the amount for the official donation receipt?
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The amount of the official donation receipt is the fair market value set by the artist.More…
When an artist creates a work of art intending to sell it, but instead donates it to a qualified donee, the gift is considered to be a disposition of property from the artist’s inventory (that is, not capital property).
An artist can set the value of a gift from his or her inventory at any amount between the artist’s cost of time and materials and the work’s fair market value, provided that its fair market value is greater than its cost. If, at the time of the donation, the fair market value is less than the cost amount, the receipt must still equal the fair market value of the donated property as set by the artist.
As in the case of business inventory, the artist who donated the painting will have
- an income of the value set by him or her
- a tax receipt for donation of the same amount.
An artist’s donation may also be a work of cultural property (see FAQ D18).
To be sure, the charity should seek professional advice.