[Congressional Record Volume 155, Number 27 (Tuesday, February 10, 2009)]
[Senate]
[Pages S2081-S2082]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LEAHY (for himself, Mr. Bennett, Mr. Bayh, Mrs. Boxer, Mr. 
        Brown, Mr. Cochran, Mr. Dodd, Mr. Durbin, Mr. Johnson, Mr. 
        Kennedy, Mr. Sanders, Mr. Schumer, and Mr. Whitehouse):
  S. 405. 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, today we reintroduce the Artist-Museum 
Partnership Act, and once again, I am pleased to be joined in this 
effort by my good friend Senator Bennett from Utah.
  This bipartisan legislation would enable our country to keep 
cherished art works in the United States and to preserve them in our 
public institutions. At the same time, this legislation will erase an 
inequity in our tax code that currently serves as a disincentive for 
artists to donate their works to museums and libraries. We have 
introduced this same bill in each of the past five Congresses, and I am 
hopeful that this will be our year. In the past, our bill has been 
included in the Senate-passed version of the 2001 tax reconciliation 
bill, the Senate-passed version of the 2003 Charity Aid, Recovery, and 
Empowerment Act, and the Senate-passed version of the 2005 tax 
reconciliation bill. I would like to thank Senators Bayh, Boxer, Brown, 
Cochran, Dodd, Durbin, Johnson, Kennedy, Sanders, Schumer, and 
Whitehouse for cosponsoring this non-partisan bill.
  Our bill is sensible and straightforward. It would allow artists, 
writers, and composers to take a tax deduction equal to the fair market 
value of the works they donate to museums and libraries. 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 works of art created by living artists are available to the 
public in the future for study and 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 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. 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 to 
the public like this are an unintended consequence of the 1969 tax bill 
that should 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 our 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.

[[Page S2082]]

  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.
  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 crucial 
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 cnsent that the text of the bill be 
printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                 S. 405

       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:
       ``(8) 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.

  Mr. BENNETT. Mr. President, I am proud to join the Senator from 
Vermont today to introduce the Artist-Museum Partnership Act. He and I 
have introduced this legislation in the past, and we hope that our 
colleagues will see this bill for what it is: a reasonable solution to 
an unintentional inequity in our Tax Code.
  This legislation would allow living artists to deduct the fair-market 
value of their art work when they contribute their work to museums or 
other public institutions. As the Tax Code is currently written, art 
collectors are able to deduct the fair market value of any piece of art 
they donate to a museum, but the artist who created the work is only 
able to deduct the material cost, which may be nothing more than a 
canvas, a tube of paint, and a wooden frame, if he or she donated their 
art to a museum. Thus, there exists a disincentive for artists to 
donate their work to museums. The solution is simple: treat collectors 
and artists the same way. This bill would do just that.
  Certainly, this bill would benefit artists, but more importantly, the 
beneficiaries would be the museums that would receive the artwork and 
the general public who would be able to view it in a timely manner. 
This change in the Tax Code would increase the number of original 
pieces donated to public institutions, giving scholars greater access 
to an artist's work during the lifetime of that artist, as well as 
provide for an increase in the public display of such work.
  I would like to thank Senator Leahy for his work on this bill. I urge 
my colleagues to support this commonsense legislation. The benefit of 
the Artist-Museum Partnership Act to our Nation's cultural and artistic 
heritage cannot be overstated. This minor correction to the Tax Code is 
long overdue, and the Senate should act on this legislation to remedy 
the problem.
                                 ______