In addition to my first commentary on Charlie Finch’s article Liquid Skies, another point I found interesting was his reference to the use of an art inventory’s value as collateral for a gallery. This practice is in fact new and is due to a new generation of lenders who don’t understand how to evaluate levels of risk and can be directly related to the shaky subprime market I spoke in an earlier post. As for the galleries who engage in this borrowing activity, it’s foolish unless they are sure they can repay the loan.
Archive for the ‘psychic benefits’ Category
More thoughts on Liquid Skies
August 10, 2007It is almost April 15th … Cautionary Information about the Tax Benefits of Investing in Fine Art
April 10, 2007Investing in fine art can also have tax benefits. In the United States, the Internal Revenue Service considers an “investor” in art someone who can “claim that one’s interest in art is purely as an investment,” and indicates that “one must consult occasionally with experts and subscribe to the relevant periodicals” (Grant 2005). With more and more individuals claiming on their tax returns that they own an art collection solely for investment purposes, the IRS is increasingly refusing permission for such deductions and insisting that artworks cannot be hung in a home or office since the owner could derive psychic benefits from owning them. “Psychic benefits” is an art industry term that describes the enjoyment one experiences from viewing their works; their visual enjoyment.
To be considered an investor, keep it locked up, says the IRS.
