The Dow Jones‘s Shelly Banjo reveals that Congress is taking another look at the tax code to renew the practice of partial donation of works of art to museums. This practice was stopped in 2006. Before then, donors were allowed 10 years to take incremental benefits off their taxes. Congress felt their were abuses and limited the time to 10 years and made it difficult to take additional value to account for appreciation. Now there’s a new bill from New York’s Sen. Charles Schumer to bring back “fractional gifts:”
the proposed change allows donors 20 years to complete the donation of the gift and lets them take a tax deduction on some of the appreciation. […] However, if the art declines in value the same rules apply and the donor’s tax break could shrink. […] Other new rules require museums to report contributions on yearly tax forms and exhibit the artwork in proportion to its ownership interest over every five-year period, keeping the art from remaining in the donor’s private home during the gifting period.
It must have taken some arm twisting to get the fractional gifts back into the tax code because even though the bill is a compromise, not all of the Senators are happy with it:
“Some museum officials thought Congress went too far to shut down abuse. I agreed to look at a compromise that would preserve accountability from donors and museums to taxpayers,” Sen. Grassley said. “I still think partial donations of art are of questionable value to taxpayers, but museum officials and their champions feel strongly otherwise, so I’m willing to continue to listen.”
Restoration Work on Gifts of Art (Wall Street Journal)