Senator Patrick Leahy has revived the Museum Partnership Act. If passed, the Act would change the portions of the tax code that currently limit the value of an artist’s donation to a museum or other cultural institution to the cost of the materials used to the fair market value of the work. The Act has been put before Congress before, but has always been tabled.
Prior to 1969, an artist that donated his work to a museum or other charitable organization could take the fair market value of the work as a charitable deduction on his income taxes. Unfortunately, the process was abused. Artists were claiming values that had no connection to the fair market value of the work but were arbitrarily picked by the artist. After several high profile cases of tax fraud by artists, Congress altered the tax code so that an artist could only take the cost of the supplies used in creating the piece as a charitable deduction. Yet if that artist sold that work for several thousand dollars, and the buyer donated the piece, the buyer could take a deduction of the price paid. Clearly this set up a very unfair structure. Donations to museums and other cultural institutions plummeted in the years following the change in the tax code and have not reached pre-1969 levels since.
The Museum Partnership Act seeks to remedy the severe shift the 1969 changes made in the tax code and the unfair result. Artists would once again be able to take a deduction of the fair market value of a donated work, but it includes several requirements that are designed to mitigate the fraud that occurred before 1969. Passage of this bill will help artists who wish to donate their works to cultural institutions and hopefully will encourage them to do so.
You can read the text of the Act here.