Saturday, October 11, 2014

Yes, Art Is a Business

I posted back in April about the tax problems of local musician/performer Venus DeMars. In short, DeMars and her wife (a poet) were raked over the coals by the Minnesota Department of Revenue for years because someone in the department thought they weren't really professional artists, and therefore weren't allowed to take tax deductions they had taken.

Happily, they were finally vindicated back in May of this year.

I wondered at the time what the law or policy was at the federal level, though, and today's newspaper delivered the answer, in the form of a New York Times article about the case of painter and printmaker Susan Crile. Crile teaches full-time at Hunter College in the studio art department, a position that requires her to show art, but not sell it. Her work is in the collection of the Met, the Guggenheim, and other major museums.

She has been an artist for 40 years, including at least 10 before she joined Hunter part-time and 20 years before she was tenured. She has grossed close to $700,000 from art during her career, but only made a profit in three years. The types of expenses she has claimed include art materials and food and travel expenses related to showing her work.

The IRS wanted $81,000 in back taxes for the years 2004 to 2009. They cited her lack of a business plan as evidence that her art is not a business. (!!!) They declared that her claim to be an artist and a teacher was "artificial." Her expenses, the agency said, "should have been filed not as business expenses but as unreimbursed employee expenses."

The case was just decided in the U.S. Tax Court by Judge Albert G. Lauber. He ruled that Crile had "'met her burden of proving that in carrying on her activity as an artist, she had an actual and honest objective of making a profit' and therefore under tax law should be considered a professional artist."

The story ends with these paragraphs:

Robert Storr, dean of the Yale School of Art, who testified on Ms. Crile’s behalf, said Monday that the ability to deduct art-related expenses — in art careers that might generate little money — was “one of the last remaining areas where the federal government cuts artists any slack to allow them to do what they do,” and that its protection was crucial.

Micaela McMurrough, a lawyer... who represented Ms. Crile, said one of the key points argued in the case was that “art is not a business like other businesses.” “And I think that’s what this decision reflects, to a large extent,” she said....

Ms. Crile said she was relieved by the decision, for herself but also for many other creative professionals it might affect. “I think this was an attempt to get rid of a whole category of people from being able to take tax deductions,” she said. “I’ve done a lot of political work that is not so easy, and it’s not easy to show or to sell. But I’m an artist. And if I’m not considered one, then I don’t know who could be.”
I'm generally pretty supportive of the IRS and its mission. I believe in paying taxes for the common good. I think they get used as a political strawman way too often.

But this is one type of case where I'm glad they've been told to back off. From now on, I hope they refocus on going after people who are cheating in a big way, not artists who just barely are getting by.

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