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It’s mostly about buying a future tax deduction. (1) Buy this thing now for $100,000. (2) Wait a few years. (3) Donate it to a museum or other charity at a v
by bdowling 3y ago
It’s mostly about buying a future tax deduction.
(1) Buy this thing now for $100,000.
(2) Wait a few years.
(3) Donate it to a museum or other charity at a valuation of $400,000.
(4) Take a $400,000 charitable contribution deduction on your taxes.
- voisin 3y agoI don’t deny that this behaviour exists, but I don’t understand why it is allowed to exist. I understand it in the context of donating assets with a liquid market, like stocks and bonds, but for illiquid, difficult to value assets like these or art, it seems like a mega opportunity for tax evasion that could easily be cracked down upon. At least have a “claw back” where if the charity then sells the thing for $100,000 then the donor has to retract the full value of the original deduction.
- gniv 3y agoThe problem is that most of the time the new valuation is real. In the case of art at least, there is an extra step between 2 and 3: create hype to make the artist popular.