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Tax breaks for artists – New rules proposed for donations

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A bill before the House Ways and Means Committee aims to correct an apparent tax inequity by allowing artists to claim deductions for the market value of works they donate to nonprofits, the Los Angeles Times reports.

“If a wealthy collector can buy a painting, donate it to a museum and claim a deduction for the fair market value of the painting, but the artist can’t, where does that figure into a tax-equity formula,” Maxwell L. Anderson, director of the Whitney Museum of American Art in New York, told the Times.

Anderson chaired the Association of Art Museum Directors task force that drafted the bill and has lobbied extensively in support of it.

Currently, artists, writers, composers and other creative people can claim an income tax deduction only for the cost of materials when they give their own work to a museum or library.

The Artists’ Contribution to American Heritage Act of 1999 would allow artists to deduct the fair market value of their work, as determined by a professional appraisal.

The bill is intended to increase donations to American museums as well as to give tax breaks to artists, Anderson told the Times.

Under the terms of the bill, artists can donate only works they have created at least 18 months before making the gift.

The restriction is intended to prevent artists from deliberately painting a tax deduction.

The bill also provides that the value of the gift cannot exceed the artists’ income from similar work during the same tax year.

Museums, libraries and other nonprofits are qualified recipients as long as their function or purpose is related to the gift.

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