You Make the Call - Aug. 24, 2023

Question: Joel is an artist who donated a ceramic pot he made to a non-profit organization. The materials used to produce the pot cost Joel $100. The non-profit organization later sold the craft for $5,000. Can Joel deduct the $5,000 on his return as a charitable contribution?

Answer: No. Joel can only deduct $100 as a charitable contribution. Artwork that is created by the donor is considered ordinary income property and not capital gain property. Contributions of capital gain property are deductible in full at their fair market value on the date of contribution. Joel can only deduct his basis in the property as a deduction on his return, not the fair market value of the item. The basis is the cost of materials he used to produce the pot, which was $100.