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Taxation and Contract Issues in the Art World

Boston Tax Attorney Helping You Understand and Resolve Your Art Taxation and Contract Concerns

Commissioning, buying, selling and loaning works of art are much more than financial transactions. Art has the ability to change our lives – how we think and how we feel – and it can leave an impression that lasts a lifetime. But, of course, there are financial considerations involved as well, and this means that there are tax-related issues that need to be addressed.

Our firm offers strategic tax advice to artists, museums, municipalities, trusts and foundations, individual purchasers, art galleries, auction houses and other clients. We also provide representation to artists needing assistance with sale contracts, art consignment agreements, relocation of art to different countries and much more.

Kevin E. Thorn, Managing Partner of Thorn Law Group, is widely regarded throughout Boston and internationally as a leading tax attorney for complex and nuanced state, federal and international tax matters. If you have questions about art taxation in the Commonwealth of Massachusetts, or concerns related to the Internal Revenue Service (IRS) or any other governing body throughout the United States or around the world, Thorn Law Group can help you meet your legal obligations while preserving your assets to the fullest extent possible.

Potential Tax Issues in Art Sales, Loans and Other Transactions

Transactions involving art can potentially have numerous local, state, federal and international tax implications. Depending on the type of work, the work’s history, the type of transaction and the parties involved (among other factors), the disposition of a piece of art can potentially bring into play one or more of:

  • Sales and use tax
  • Income tax
  • Expense deductions
  • Capital gains tax
  • Estate and gift tax
  • Personal property tax
  • Resale (and “droit de suite”) royalties
  • Import, export, and other cross-border tax obligations
  • “Trade-in” exemptions
  • “Like-kind” exchanges (which are no longer tax-exempt for personal property, including artwork, under federal law)
  • International Tax Issues Dealing with Disclosures and Forms to File with the IRS

Critically, different types of art transactions can have various tax implications under certain circumstances. For example, as the IRS explains:

Once a work of art leaves the hands of the artist, it generally goes to one of four categories of persons, each of which have different tax obligations. They are the investor, hobbyist, business collector and dealer. Which category a taxpayer falls into would depend on the facts and circumstances of that taxpayer's case. The line between the above categories of holders of art for tax purposes is not always clear therefore there has been much litigation in the courts regarding the tax implications of art transactions. . .
At Thorn Law Group, we can help you address all of the tax-related implications of your art-related endeavors:

Artists Selling Work

We can help you comply with all applicable sales, income tax and royalty laws and we can help you use expense deduction planning strategies to minimize your overall tax liability.

Hobbyist Or Art Investor

We can help you meet your tax obligations and develop a long-term strategy focused on lawful tax avoidance.

Art Gallery Or Auction House

Work for a museum or municipality, are dealing with the administration of an estate that includes a substantial art collection, or if you have any other art taxation questions, we can help you make informed decisions and move forward with confidence.

Potential Art Taxation Controversies Arising Out of Purchases, Sales and Loans

The IRS and other government authorities are not forgiving when individuals, companies and non-profit organizations make mistakes. This is as true in the art world as it is in any commercial industry. If you do not file the necessary forms and pay what you or your business owes, you can quickly find yourself facing steep penalties. An art taxation attorney, like Kevin Thorn, is skilled in this nuanced area of taxation law and will ensure that the paperwork is completed properly.

In addition to assisting clients with tax planning and state, federal, and international tax compliance, we also represent clients in tax controversies. We routinely represent clients in IRS audits and appeals, and we have significant experience in a broad range of other tax-related disputes as well. This includes matters such as:

  • Artwork valuations and inventory reporting issues
  • Unreported income from checks or cash payments
  • Bartering transactions involving artwork and other assets
  • Mischaracterization of holdings, inventory and investments as capital assets
  • Mischaracterization of art transactions as loans rather than secured sales
  • Improperly deducting artwork donations at fair market value
  • Business expense deductions for home offices and studios

Regardless of the specific circumstances involved, if you have been contacted by the IRS or any other government agency regarding a potential tax law violation, it is important that you hire experienced tax counsel promptly. At Thorn Law Group, Boston tax attorney Kevin E. Thorn and his team stand ready to help artists, sellers, purchasers, business owners, trustees and other clients deal with their art taxation issues efficiently and effectively, and we can engage with taxing authorities directly on your behalf if necessary.

We Provide Assistance with Contracts and All Other Types of Art Transactions

Thorn Law Group provides services to clients in Boston, throughout Massachusetts and across the globe in connection with all types of art transactions. With decades of combined experience, our tax attorneys offer deep insights and clear advice to clients who need help understanding the tax implications of:

  • Commissioning original works of art (public and private)
  • First-time sales of original art pieces
  • Resale of fine art and other artwork
  • Artwork loans to galleries, museums and other facilities
  • Art consignment agreements
  • Art auction sales and purchases
  • Purchase of artwork domestically and overseas
  • Charitable donations of art pieces
  • Relocating artwork to foreign residences, galleries, museums, business facilities, freeports, and safety deposit boxes
  • Insurance claims involving works of art

This list is not exhaustive. Regardless of your needs or what questions you may have, we encourage you to get in touch with our office. Our attorneys will meet with you to examine the details of your situation or transaction, discuss your options and determine the most tax-advantageous path forward.

Speak with Art Taxation Attorney Kevin E. Thorn, Managing Partner of Thorn Law Group Today

If you would like to speak with an art taxation attorney about your options or your legal obligations, please feel free to contact us confidentially now. To request an appointment with Boston tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, email us at ket@thornlawgroup, call 617-692-2989 or inquire online today. Visit our Boston office at 10 Post Office Square, 8th Floor, Boston, MA 02109.

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