[Congressional Record Volume 151, Number 15 (Monday, February 14, 2005)]
[Senate]
[Pages S1346-S1347]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
By Mr. LEAHY (for himself, Mr. Bennett, Mr. Bingaman, Ms.
Cantwell, Mr. Cochran, Mr. Conrad, Mr. Dodd, Mr. Durbin, Mr.
Jeffords, Mr. Kennedy, Mr. Kerry, Mr. Lieberman, Mr. Lugar, Mr.
Stevens, and Mr. Warner):
S. 372. A bill to amend the Internal Revenue Code of 1986 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; to the Committee on Finance.
Mr. LEAHY. Mr. President, I rise today again with Senator Bennett to
introduce the ``Artist-Museum Partnership Act.'' This bipartisan
legislation will enable our country to keep cherished art works in the
United States and to preserve them in our public institutions, while
erasing an inequity in our tax code that currently serves as a
disincentive for artists to donate their works to museums and
libraries. This is the same bill we introduced the past three
Congresses. It was also included in the Senate-passed version of the
President's 2001 tax cut bill, and in the Senate-passed version of the
2003 Charity Aid, Recovery, and Empowerment, CARE, Act. I would like to
thank Senators Bingaman, Cantwell, Cochran, Conrad, Dodd, Durbin,
Jeffords, Kennedy, Kerry, Lieberman, Lugar, Stevens and Warner for
cosponsoring this bipartisan bill.
Our bill is sensible and straightforward. It would allow artists,
writers, and composers who donate works to museums and libraries to
take a tax deduction equal to the fair market value of the work. This
is something that collectors who make similar donations are already
able to do. Under current law, artists who donate self-created works
are only able to deduct the cost of supplies such as canvas, pen, paper
and ink, which does not even come close to their true value. This is
unfair to artists and it hurts museums and libraries--large and small--
that are dedicated to preserving works for posterity. If we as a nation
want to ensure that art works created by living artists are available
to the public in the future--for study or for pleasure--this is
something that artists should be allowed to do.
In my State of Vermont, we are incredibly proud of the great works
produced by hundreds of local artists who choose to live and work in
the Green Mountain State. Displaying their creations in museums and
libraries helps
[[Page S1347]]
develop a sense of pride among Vermonters and strengthens a bond with
Vermont, its landscape, its beauty, and its cultural heritage. Anyone
who has contemplated a painting in a museum or examined an original
manuscript or composition, and has gained a greater understanding of
both the artist and the subject as a result, knows the tremendous value
of these works. I would like to see more of them, not fewer, preserved
in Vermont and across the country.
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 such 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. Losses like this are an unintended
consequence of the 1969 tax bill that should now be corrected.
Congress changed the law for artists more than 30 years ago 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 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 and 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 recipient'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.
This bill would also correct another disparity in the tax treatment
of self-created works--how the same work is treated before and after an
artist's death. While living artists may only deduct the material costs
of donations, 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 Joint Committee on Taxation has previously estimated that our
bill would cost $50 million over 10 years. This is a moderate price to
pay for our education and the preservation of our cultural heritage.
I want to thank my colleagues again for cosponsoring this bipartisan
legislation. The time has come for us to correct an unintended
consequence of the 1969 law and encourage rather than discourage the
donations of art works by their creators. This bill will 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. Mr. President, I ask unanimous consent that the text of
the bill be printed in the Record.
There being no objection, the bill was ordered to be printed in the
Record, as follows:
S. 372
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 ``Artist-Museum Partnership
Act''.
SEC. 2. 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, or artistic compositions.--
``(A) In general.--In the case of a qualified artistic
charitable contribution--
``(i) the amount of such contribution 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
subsection (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.
______