Monday, July 14, 2008

Retained Interest in Gifted Art Work

The Chronicle of Philanthropy and the New York Times report that Congress is considering tinkering with the rules that place limits on how and when donors who retain an interest in donated art work may receive tax deductions.  Under current rules,  donors are required to relinquish ownership of donated art work within 10 years of making the gift.  Also, donors cannot write off more than the value of the art at the time it is first donated instead of adjusting the value each year to reflect appreciated fair market value.  As one might imagine, these rules - which were implemented in 2006  and are much more onerous than previous rules - adversely impact the level of donations to the art and museum communities significantly.  Congress's proposed changes, as reported in the New York Times and in the Chronicle of Philanthropy, would loosen these rules somewhat.  Here is a quote from the Chronicle of Philanthropy article of July 10, 2008:

Mr. Grassley said his office is pushing language that would require donors who want deductions for partial donations to submit the valuations of their donations to the Internal Revenue Service for independent review.

Another change would require charities to take possession of donated materials for a set amount of time before a donor could claim a deduction.

For the entire article, see "Lawmakers Discuss Changes to Rules Governing Some Gifts of Art" in the July 10, 2008, issue of the Chronicle of Philanthropy.  For additional coverage of this story, see "Senate Panel Close to Deal on Donations of Artwork " in the July 10, 2008, issue of the New York Times.


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