Fair Warning: Artwork, Private Foundations, and Self-Dealing
The weekend has ended and Art Basel – Miami 2016 has concluded. To many U.S. taxpayers, it’s just another Monday, but to serious collectors who attended this vibrant art fair focused on contemporary paintings and sculptures, this was a major event. Now faced with anticipated shipments and bills, those who made substantial additions to their collections may be thinking “Hmmm, what am I going to do with all of this?”
For the short-term, they may be fine. However, a long-term solution to this question may be for the collector to create a private foundation to hold their art. A foundation may be a wonderful charitable vehicle for a donation of artwork and may be established as a stand-alone entity or in conjunction with creating a private museum. In return for the donations, the donor receives tax benefits, the foundation basically operates tax-free, and the public has the opportunity to experience artwork previously unavailable to them. Before making any commitment, though, a collector should be aware of two important terms: “disqualified person” and “self-dealing”.
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