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Photo:
Lindsey Nobel
It’s famously hard for artists to pay the bills with income from their work. But some have found a way to do it without having to sell a single piece.
These artists are finding that they can make ends meet by trading their creations for services or items they need, from medical treatments to rent. Meanwhile, the providers of goods and services willing to barter often see it as helping out a struggling acquaintance—with the promise of a windfall if the artist ends up becoming acclaimed.
But for both parties, there are delicate questions to consider before making any deals.
Framing the issue
First, there are the personal implications of accepting art in a barter. It might seem to set a precedent, as other artists would hope for the same arrangement. (Artists are apt to tell their friends.) Does a professional who viewed a swap as a one-time thing say to others, “I wish I could, but I’ve run out of wall space” or “I’ve bartered once or twice over the years but not as a regular practice”?
Then there are the financial consequences. The bartered items and services represent income, taxable at state rates, and both parties must report them. That means negotiating the value of the artwork and the services being provided, which can get tricky.
Even though both parties theoretically want the lowest price for the transaction for tax purposes, the professional usually wants to obtain as much art as possible, and the artist as many goods or services. Sparring over how much each person gets will turn a friendly conversation awkward and contentious in a hurry—especially since lawyers, doctors and others are apt to think of the transaction as a favor, and tend to view the artist’s work as overpriced.
Because the transaction must be reported as income, “it would also potentially require an appraisal for both income and sales-tax purposes,” says
John Cahill,
a lawyer in New York who represents art collectors, dealers and artists.
Of course, it’s vital that both parties report their income. Internal Revenue Service agents are instructed to look at the walls of the homes and offices of the people they audit and ask where certain items came from. When they discover unreported income in the form of artworks or other objects, the taxpayer will be required to pay back taxes, as well as penalties. Additionally, the IRS will have reason to then audit the artists.
For protection, any trade should be formalized with a receipt, listing the goods or services provided and the form of payment for them, just as with any other transaction. Not only is the receipt a record of income for both parties, it is protection for the receiver of art; without the paperwork, it may not be possible to prove at a later date that the artwork has not been stolen, or to prove that it really was created by the artist.
Because of such complexities, some professionals shun barter arrangements. Mr. Cahill says he has turned away offers to be paid in artwork, since the artists don’t have an active market or history of cash sales, making valuation difficult. And the process adds formality and cost to what at first seemed like an informal transaction.
A rosy picture
Still, some artists are able to help themselves substantially with these transactions.
Previously in Art Collecting
- Art Collectors, Pay Your Taxes (September 2017)
- Two Paths to Selling Art (June 2017)
- Art Auction Houses Offer Cash Advances (March 2017)
- Posthumous Works Pose Challenges for Collectors (February 2017)
- Animation Art Draws Buyers (December 2016)
Lindsey Nobel,
a 48-year-old artist in Los Angeles, says over the years she has traded as many as 75 of her colorful, abstract paintings for various services and discounts. The key to Ms. Nobel’s success has been to find the people she needs—landlords, medical professionals and others—who are willing to swap goods and services for works of art.
For instance, a dentist gave her a checkup for a 3’x5’ work. A doctor arranged for an outpatient surgery for a 6’x5’ painting. Ms. Nobel has even gotten a discount on rent in an apartment complex in Malibu in return for one of her pieces.
“On paper, I don’t make much money, but I live pretty well,” says Ms. Nobel.
Dar Gadol, owner of Chelsea Healing in New York, agreed to trade three acupuncture sessions for one of Ms. Nobel’s small paintings, because he had gotten to know her over the years she lived in the building where he worked. “Lindsey said to me, ‘Look, I don’t have any funds at the moment. Can I just give you a painting?’ ” says Mr. Gadol.
He says he has made the same arrangement with others, acquiring sketches, prints and sculptures, as well as handkerchiefs from dressmakers. “I believe in art and in a person’s belief in art,” he says.
Mr. Grant is a writer in Amherst, Mass. He can be reached at reports@wsj.com.
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