[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 242 Introduced in Senate (IS)]







108th CONGRESS
  1st Session
                                 S. 242

To amend the Internal Revenue Code of 1986 to provide the same capital 
   gains treatment for art and collectibles as for other investment 
  property and to provide that a deduction equal to fair market value 
  shall be allowed for charitable contributions of literary, musical, 
       artistic, or scholarly compositions created by the donor.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 29, 2003

  Mr. Domenici (for himself and Mr. Bennett) introduced the following 
  bill; which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to provide the same capital 
   gains treatment for art and collectibles as for other investment 
  property and to provide that a deduction equal to fair market value 
  shall be allowed for charitable contributions of literary, musical, 
       artistic, or scholarly compositions created by the donor.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Art and Collectibles Capital Gains 
Tax Treatment Parity Act''.

SEC. 2. CAPITAL GAINS TREATMENT FOR ART AND COLLECTIBLES.

    (a) In General.--Section 1(h) of the Internal Revenue Code of 1986 
(relating to maximum capital gains rate) is amended by striking 
paragraphs (5) and (6) and inserting the following new paragraph:
            ``(5) 28-percent rate gain.--For purposes of this 
        subsection, the term `28-percent rate gain' means the excess 
        (if any) of--
                    ``(A) section 1202 gain, over
                    ``(B) the sum of--
                            ``(i) the net short-term capital loss, and
                            ``(ii) the amount of long-term capital loss 
                        carried under section 1212(b)(1)(B) to the 
                        taxable year.''.
    (b) Conforming Amendments.--
            (1) Section 1(h)(9) of the Internal Revenue Code of 1986 is 
        amended by striking ``collectibles gain, gain described in 
        paragraph (7)(A)(i),'' and inserting ``gain described in 
        paragraph (7)(A)(i)''.
            (2) Section 1(h) of such Code is amended by redesignating 
        paragraph (12) as paragraph (6).
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2002.

SEC. 3. CHARITABLE CONTRIBUTIONS OF CERTAIN ITEMS CREATED BY THE 
              TAXPAYER.

    (a) In General.--Subsection (e) of section 170 of the Internal 
Revenue Code of 1986 (relating to certain contributions of ordinary 
income and capital gain property) is amended by adding at the end the 
following new paragraph:
            ``(7) Special rule for certain contributions of literary, 
        musical, artistic, or scholarly compositions.--
                    ``(A) In general.--In the case of a qualified 
                artistic charitable contribution--
                            ``(i) the amount of such contribution taken 
                        into account under this section shall be the 
                        fair market value of the property contributed 
                        (determined at the time of such contribution), 
                        and
                            ``(ii) no reduction in the amount of such 
                        contribution shall be made under paragraph (1).
                    ``(B) Qualified artistic charitable contribution.--
                For purposes of this paragraph, the term `qualified 
                artistic charitable contribution' means a charitable 
                contribution of any literary, musical, artistic, or 
                scholarly composition, or similar property, or the 
                copyright thereon (or both), but only if--
                            ``(i) such property was created by the 
                        personal efforts of the taxpayer making such 
                        contribution no less than 18 months prior to 
                        such contribution,
                            ``(ii) the taxpayer--
                                    ``(I) has received a qualified 
                                appraisal of the fair market value of 
                                such property in accordance with the 
                                regulations under this section, and
                                    ``(II) attaches to the taxpayer's 
                                income tax return for the taxable year 
                                in which such contribution was made a 
                                copy of such appraisal,
                            ``(iii) the donee is an organization 
                        described in subsection (b)(1)(A),
                            ``(iv) the use of such property by the 
                        donee is related to the purpose or function 
                        constituting the basis for the donee's 
                        exemption under section 501 (or, in the case of 
                        a governmental unit, to any purpose or function 
                        described under section 501(c)),
                            ``(v) the taxpayer receives from the donee 
                        a written statement representing that the 
                        donee's use of the property will be in 
                        accordance with the provisions of clause (iv), 
                        and
                            ``(vi) the written appraisal referred to in 
                        clause (ii) includes evidence of the extent (if 
                        any) to which property created by the personal 
                        efforts of the taxpayer and of the same type as 
                        the donated property is or has been--
                                    ``(I) owned, maintained, and 
                                displayed by organizations described in 
                                subsection (b)(1)(A), and
                                    ``(II) sold to or exchanged by 
                                persons other than the taxpayer, donee, 
                                or any related person (as defined in 
                                section 465(b)(3)(C)).
                    ``(C) Maximum dollar limitation; no carryover of 
                increased deduction.--The increase in the deduction 
                under this section by reason of this paragraph for any 
                taxable year--
                            ``(i) shall not exceed the artistic 
                        adjusted gross income of the taxpayer for such 
                        taxable year, and
                            ``(ii) shall not be taken into account in 
                        determining the amount which may be carried 
                        from such taxable year under subsection (d).
                    ``(D) Artistic adjusted gross income.--For purposes 
                of this paragraph, the term `artistic adjusted gross 
                income' means that portion of the adjusted gross income 
                of the taxpayer for the taxable year attributable to--
                            ``(i) income from the sale or use of 
                        property created by the personal efforts of the 
                        taxpayer which is of the same type as the 
                        donated property, and
                            ``(ii) income from teaching, lecturing, 
                        performing, or similar activity with respect to 
                        property described in clause (i).
                    ``(E) Paragraph not to apply to certain 
                contributions.--Subparagraph (A) shall not apply to any 
                charitable contribution of any letter, memorandum, or 
                similar property which was written, prepared, or 
                produced by or for an individual while the individual 
                is an officer or employee of any person (including any 
                government agency or instrumentality) unless such 
                letter, memorandum, or similar property is entirely 
                personal.
                    ``(F) Copyright treated as separate property for 
                partial interest rule.--In the case of a qualified 
                artistic charitable contribution, the tangible 
                literary, musical, artistic, or scholarly composition, 
                or similar property and the copyright on such work 
                shall be treated as separate properties for purposes of 
                this paragraph and subsection (f)(3).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to contributions made after the date of the enactment of this Act in 
taxable years ending after such date.
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