In a recent article on artsy.net, Isaac Kaplan explores How Much Do Artists have over a Work after It Sold. As Kaplan explains, under VARA the answer is, yes.

The Visual Artists Rights Acts (VARA) provides visual artists control over the attribution and integrity of their work, provides that the artist shall have the right to prevent the use of his or her name as the author of the work of the visual art in the event of a distortion, mutilation, or other modification of the work which would be prejudicial to his or her honor or reputation.

In other words, if the piece that is being sold is not up to the standard of the original artist, under VARA, the artist may be able to disavow the piece.

To get to Kaplan’s full article, click here.

The Clarion List recently published an article regarding the five questions to ask before buying art, available here. To summarize:

1. Is it a good fit?  Consider how the piece fits into your existing collection and where you would display it. Many galleries will allow you to take artwork home for a few weeks, which gives you a chance to experience the work and determine if it’s really true love.

2. Is the price right? Check with an art consultant to learn more about the prices of works by the same artist, same school, or similar style before you buy.

3. Is it authentic? A conservation scientist can typically determine if a work is consistent with the materials available at that time through scientific testing of the paint and the material upon which it is painted.  Once this is done, an expert in the stylistics of the artist is consulted to give an opinion regarding the authorship of the painting.  Collectors should also get certificates of authenticity and provenance at purchase, which will help collectors seeking appraisals, buying insurance, or reselling.

4. Is it in good condition? If you have any doubts about the condition of the work, consult with an experienced conservator before buying.

5. Are you buying from someone who has the right to sell it? Although there are fewer risks with provenance and title issues when you buy an artwork directly from the artist, you should make sure that the work is an original, that it does not infringe on any other party’s rights, and that the artist has clear title to the work.  You should also know whether the artist retains any moral rights to the artwork, which could limit a buyer’s rights.

To learn more about the Art Law Practice at CASTAYBERT PLLC, click here.

Art insurance is essential for any art collector because it safeguards both the investments in art and the artworks themselves. It also protects both the current owner and future owners. The Clarion List recently published a useful reminder about the importance of art insurance, available here. To summarize:

• Specialized art insurance is best evaluated on a case-by-case basis but often has advantages over simply including your collection in your regular homeowners or renters policy. Factors to consider are the overall value of your collection, the value of individual works, and what the specific policy offers.
• Although insurance cannot replace a one-of-a-kind work of art, it can help you rebuild or restore your collection after a calamity.
• An insurance policy may also be cheaper than paying a conservator to restore damaged art after a disaster.
• If artwork is stolen, destroyed, or damaged beyond repair, an insurance policy may allow you to purchase a comparably valued work of art. Although this solution may not restore your original artwork, it provides the option to buy a comparable work.

To learn more about the Art Law Practice at CASTAYBERT PLLC, click here.

About 375,000 visual artists in the United States operate their businesses without a corporate structure, which not only leaves them vulnerable to personal liability but also prevents them from enjoying certain tax benefits. Art Law Journal recently wrote a piece on the advantages and disadvantages of the several types of business entities are available in the United States. (Read the full article here.) To summarize:

• Sole Proprietorship
  • A sole proprietorship is a type of business entity that is owned and run by one natural person.
  • No action needs to be taken to become a sole proprietor. If an individual opens a business and does not incorporate, then he or she automatically becomes a sole proprietor.
  • The sole proprietorship must pay Medicare and Social Security taxes at the end of the year. However, the sole proprietorship does not pay any payroll taxes on income, withhold income tax, file employment tax returns, or pay state or federal unemployment taxes. In addition, the sole proprietorship does not need to be covered by workers’ compensation insurance.
  • However, there is no legal distinction between the owner and the company. Since the company is not a separate business entity, there is unlimited exposure to personal liability. If the business is sued, then an owner’s personal assets may be at risk.

• Partnership
  • A partnership is a type of business organization in which two or more individuals combine resources, share profits and losses, and share joint administration and control of the business.
  • Members of a partnership often enter into a partnership agreement, which is a contract between partners that states the terms under which the business operates.
  • Partnerships are governed by state law. However, the default rules for partnerships in most states can be problematic, especially when conflicts arise between partners.
  • In addition, partnerships face unlimited liability. An individual may be personally liable for his or her partner’s actions.

• Corporation (C-Corp)
  • A corporation is a separate entity from its corporate principals. Because the corporation is a distinct entity, corporate principals have no personal liability for corporate debts, breaches of contract or personal injuries to third parties caused by the corporation, employees or agents. Moreover, creditors can only target corporate assets so cannot make any claims or seizure for personal assets.
  • C-Corps can also issue stock.
  • However, double-taxation is a major disadvantage for C-Corps.

• Subchapter S (S-Corp)
  • An S-Corp provides many of the same benefits as a C-Corp without the double taxation.
  • An S-Corp also provides liability protection for the shareholders.
  • Although S-Corps may enjoy reduced Social Security and Medicare taxes, there are additional expenses associated with an S-Corp, depending upon the state, such as workers’ compensation and unemployment insurance coverage.

• Limited Liability Company (LLC)
  • An LLC combines the personal liability protections of a C-Corp or S-Corp with the simplified tax structure and filing requirements of a partnership or sole proprietorship.
  • In addition, a company’s profits and losses flow through to the shareholders’ personal tax returns.
  • However, an LLC does not issue stock. Members of an LLC participate in the management of the company, making choices and offering guidance on the company’s direction, through majority decisions.

To learn more about what Castaybert PLLC can do for you in terms of Art Law, click here.

A situation familiar to many artists pursuing their creative careers while working another job to pay the bills, was brought to light in the Tax courts with a case involving the I.R.S and the artist, and professor, Susan Crile.

Crile, whose work is show at the MET, the Guggenheim, and several other major institutions, was accused by the I.R.S. of underpaying her taxes based on the contention that her work as an artist over the last several decades was, for tax-deduction purposes, not a profession.

Records shown in court revealed that between 1971 and 2013, Crile’s artistic endeavors were only profitable three years, yet the I.R.S. accused her of underpaying her taxes by more than $81,000 from 2004 to 2009. They argued that her work as an artist was “an activity not engaged in for profit,” and that she could not claim tax deductions in excess of the income she made form her art.

The judge in the case ruled that Crile had “an actual and honest objective of making a profit” and therefore under tax law should be considered a professional artist.

Testifying on Crile’s behalf, Robert Storr, dean of the Yale School of Art, said that the ability to deduct art-related expenses 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, according the an article written by the New York Times.

To learn more about what Castaybert PLLC can do for you in terms of Art Law, click here.