[Congressional Record Volume 146, Number 81 (Friday, June 23, 2000)]
[Senate]
[Pages S5735-S5736]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LEAHY (for himself, Mr. Bennett, and Mr. Lieberman):
  S. 2781. A bill to amend the Internal Revenue Code of 1986 to provide 
that a deduction equal to fair market values shall be allowed for 
charitable contributions of literary, musical, artistic, or scholarly 
compositions created by the donor; to the Committee on Finance.


                     artist-museum partnership act

  Mr. LEAHY. Mr. President, I rise today to introduce legislation, the 
``Artist-Museum Partnership Act,'' which would encourage the donation 
of original works by artists, writers and composers to museums and 
other public institutions, thus ensuring the preservation of these 
works for future generations. This bill would achieve this by restoring 
tax equity for artists. Artists who donate their self-created works, 
like art collectors who donate identical pieces, would be allowed to 
take a tax deduction equal to the fair market value of the work.
  Under current law, art collectors who donate works to qualified 
charitable institutions may take a tax deduction equal to the fair 
market value of the work. This serves as a powerful and effective 
incentive for collectors to donate works to public museums, galleries, 
libraries, colleges and other institutions rather than keep them hidden 
from the public eye. Unfortunately, artists who create those same works 
may not take such a deduction. Instead, artists may only deduct the 
material cost of the work which is, in most cases, a nominal amount. 
This is simply unfair to artists in Vermont, and artists across the 
nation, who want to donate their works for posterity.
  Prior to 1969, artists and collectors alike were able to take a 
deduction equivalent to the fair market value of a work, but Congress 
changed the law with respect to artists in the Tax Reform Act of 1969. 
Since then, fewer and fewer artists have donated their works to museums 
and cultural institutions. The sharp decline in donations to the 
Library of Congress clearly illustrates this point. Until 1969, the 
Library of Congress received 15 to 20 large gifts of manuscripts from 
authors each year. In the four years following the elimination of the 
deduction, the library received only one gift. Instead, many of these 
works have been sold to private collectors, and are no longer available 
to the general public.
  For example, prior to the enactment of the 1969 law, Igor Stravinsky 
planned to donate his papers to the Music Division of the Library of 
Congress. But after the law passed, his papers were sold instead to a 
private foundation in Switzerland. We can no longer afford this massive 
loss to our cultural heritage. This loss was an unintended consequence 
of the tax bill that should now be corrected.
  Over thirty years ago, Congress changed the law for artists in 
response to the perception that some taxpayers were taking advantage of 
the law by inflating the market value of self-created works. Since that 
time, however, the government has cut down significantly on the abuse 
of fair market value determinations. Under this legislation, artists 
who donate their own paintings, manuscripts, compositions, or scholarly 
compositions, would be subject to the same new rules that all taxpayer/
collectors who donate such works must now follow. This includes 
providing relevant information as to the value of the gift, providing 
appraisals by qualified appraisers, and, in some cases, subjecting them 
to review by the Internal Revenue Service's Art Advisory Panel.
  In addition, donated works must be accepted by museums and libraries, 
which often have strict criteria in place for works they intend to 
display. The institution must also certify that it intends to put the 
work to a use that is related to the institution's tax exempt status. 
For example, a painting contributed to an educational institution must 
be used by that organization for educational purposes. It could not be 
sold by the institution for profit. Similarly, a work could not be 
donated to a hospital or other charitable institution, that did not 
intend to use the work in a manner related to the function constituting 
the donee's exemption under section 501 of the tax code. Finally, the 
fair market value of the work could only be deducted from the portion 
of the artist's income that has come from the sale of similar works, or 
related activities.
  In addition to restoring tax equity for artists and collectors, this 
bill would also correct another disparity in the tax treatment of self-
created works--the difference between how the same work is treated 
before and after

[[Page S5736]]

an artist's death. While artists may only deduct the material costs of 
donations made during their lifetime, donations of those same works 
after death are deductible from estate taxes at the fair market value 
of the work. In addition, when an artist dies, works that are part of 
his or her estate are taxed on the fair market value.
  The time has come for us to correct an unintended consequence of the 
1969 bill and encourage rather than discourage the donations of art 
works by their creators. The public benefit to the nation, when artists 
are encouraged to contribute their works during their lifetimes, cannot 
be overemphasized. It allows historians, scholars, and the public to 
learn directly from the artist about his or her work. From artists 
themselves, we can learn how a work was intended to be displayed or 
interpreted and what influences affected the artist.
  In Vermont, we were lucky enough to have Sabra Field, a well known 
artist who has been creating wood block prints for the past 40 years, 
donate over 500 of her own original prints to Middlebury College, at 
their behest. With those prints, Middlebury will establish the Sabra 
Field Collection so that students of the college as well as Vermonters 
and visitors to our state will be able to view her original works on 
display. We Vermonters owe her our thanks for her incredible 
generosity. Under current law, Ms. Field, whose prints have sold for up 
to $4,000 on the market, was unable to deduct the fair market value of 
the donated works from her taxes, as a collector of those same works 
would have been able to. In that instance, the public's gain was Ms. 
Field's loss. This legislation would create a win-win situation for 
all.
  The Senate recently recognized the importance of the arts in our 
children's education when it passed a resolution designating March 2000 
as ``Arts Education Month.'' The Artist-Museum Partnership Act could 
make a critical difference in an artist's decision to donate his or her 
work, rather than sell it to a private party, where it may become lost 
to the public forever. I cannot think of a better way to enhance arts 
education than to encourage the donation of art works by living 
artists, a few of whom we are lucky enough to have in Vermont, to 
public institutions across the nation.
  I want to thank my colleagues Mr. Bennett and Mr. Lieberman for 
cosponsoring this bipartisan legislation. Mr. President, I would also 
like to submit to the record a letter from the Association of Art 
Museum Directors, in support of this bill.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:
                                                Association of Art


                                             Museum Directors,

                                     Washington, DC, May 25, 2000.
     Hon. Patrick Leahy,
     U.S. Senate, Washington, DC.
     Hon. Robert Bennett,
     U.S. Senate, Washington, DC.
       Dear Senators Leahy and Bennett. On behalf of the 
     Association of Art Museum Directors (AAMD), I thank you for 
     introducing legislation that would allow artists, composers 
     and writers to take a deduction of the fair-market value of a 
     contribution of their own work to a charitable institution.
       As a result of changes to the tax code in 1969, visual 
     artists, writers and composers can no longer take a deduction 
     based on the fair-market value of a contribution of their own 
     work to a charitable organization. The artists' deduction is 
     limited to the cost of materials in preparing a work--in the 
     case of a visual artist, canvas and paint. However, a 
     collector, making an identical donation, may take the fair 
     market value of the work. Also, once the artist dies, his or 
     her spouse may contribute the work and use the fair-market 
     value as the basis of the donation.
       As a result, contributions to museums and libraries by 
     living artists and writers have all but disappeared in the 
     last 30 years, depriving the public of access to its cultural 
     heritage, since many of the pieces are sold abroad or into 
     private collections and never seen again. If instead the 
     works were contributed to a charitable institution, the 
     artists could, while still alive, provide interpretations and 
     insights that would be of enormous benefit to the public in 
     understanding 20th century art.
       Artists like Chuck Close and Sam Gilliam who have achieved 
     a considerable degree of success, would be more willing to 
     share their work with the public through donations to major 
     institutions. However, the benefits of the proposed 
     legislation would not be limited to major artists and 
     institutions.
       Many smaller museums would benefit from contributions by 
     local artists in the community who could be important in 
     documenting geographic, ethnic, religious or regional 
     examples of art.
       The AAMD, which was founded in 1916 and represents 170 art 
     museums nationwide, fully supports the enactment of this 
     legislation.
           Sincerely,
                                          Millicent Hall Gaudieri,
                                               Executive Director.
                                 ______