You don’t have to be an art collector to have a piece of art that’s worth a few thousand dollars or more. For example, it could be something you bought a long time ago that has gained value, or something you inherited. To get a deduction for the full-market value of a work of art donated to charity...
1. Have the work of art appraised. To be deductible at its full-market value, a donation of art valued at more than $5,000 must be accompanied by a written appraisal prepared by a qualified appraiser. The appraiser must sign IRS Form 8283, Noncash Charitable Contributions, and so must the charity. This form must be attached to your income tax return.
The appraisal must be made no earlier than 60 days before the date of the donation and must be in your possession by the due date (including extensions) of your tax return. If the value of the artwork is greater than $20,000, a copy of the appraisal must be attached to your tax return. If more than $500,000, the original appraisal must be attached.
2. Ask the organization to which you donate the artwork to agree to retain it for a time. If the organization sells the art within three years of receiving it, it must file Form 8282, Donee Information Return, with the IRS. This could limit your deduction to what you paid for the work. It’s no surprise that this potential result is not usually publicized by charities.
3. Be sure the recipient uses the piece of art for its "exempt purposes," that is, the function that the charity or institution was created to perform -- its mission.
Examples: The gift of a painting to an art museum for display in its galleries or to a university to be used as a teaching aid. If the recipient uses the work for unrelated purposes -- for example, you give it to a general purpose charity like United Way -- your deduction is limited to its cost to you.
More traps: There are IRS penalties for inflating valuations of art objects... appraisal fees are deductible only as a miscellaneous itemized deduction, not as a charitable contribution... with certain exceptions, deductions for donations of art are limited to 30% of your adjusted gross income (you may carry over the excess for five years).