Since 2000, Art Rent and Lease has structured tax-deducitble art rentals for corporate, healthcare and hospitality clients throughout the US. Our consultants work with building and facility managers, designers and architects to bring the beauty of fine art into the workspace, utilizing sustainable artwork from our gallery of emerging and established artists.
An art rental may be the only true method for a business to take a deduction on artwork, providing the rental is structured to meet IRS guidelines. Under a true rental, a business entity may expense the rental payment for artwork located at their place of business, just as they would when renting furniture, fixtures or equipment.
Artwork (and antique musical instruments) do not have a "determinable useful life" for depreciation purposes as defined by the IRS, and cannot be depreciated or expensed. It makes no difference if artwork is acquired by purchase or a lease: leases typically have a fixed purchase option of $1 or 10%, making the lease a conditional sales contract (or capital lease) in the eyes of the IRS, and therefore not a qualifying structure.
An excerpt taken from "The CPA Journal" regarding Federal Taxation:
Revenue Ruling 68-232 (1968-1 C.B. 79) states that a valuable and treasured art piece does not have a determinable useful life. The ruling also distinguishes between the condition of the artwork and its life. While the actual physical condition of the artwork may influence the market value placed on it, its condition will not ordinarily limit or determine the artifact's useful life. Accordingly, works of art may not be depreciated. While a precise definition of "works of art" does not exist in the code, such assets usually fall into a category of assets that have no determinable useful life and do not predictably decline in value.
If your company is considering artwork for a new location, a renovation or to replace outdated works, please contact us about structuring a rental that will allow you to not only enjoy the artwork, but also take advantage of tax advantages.
Visit us at: http://www.artrentandlease.com/ or call (888) 440-9260 x710 for more information.
Our attorney's advise us to inform you to consult with your tax professional prior to any fine art acquisition. This information is not meant to provide legal or tax advise and we cannot be held responsible for any errors or omissions.