Support tax deduction for artists

Bills introduced in Congress

Updated: Tuesday, December 1st, 2009 | By Lukas Pleva

During the campaign, Barack Obama promised to help artists get some love from the Internal Revenue Service.

Under current U.S. tax law, individuals who donate a self-created work of art to a non-profit institution can only deduct the cost of the materials used to create the work from their taxable income. At least in the tax world, the value of the work itself is considered inconsequential. Critics, including President Obama, argue that the unintended consequence of this restriction is a decline in the number of art contributions to tax-exempt organizations.

To address the issue, President Obama has pledged to support and sign into law the Artist-Museum Partnership Act. The law would amend the Internal Revenue Code of 1986 to "allow taxpayers who create literary, musical, artistic, or scholarly compositions or similar property a fair market value ... tax deduction for contributions of such properties, the copyrights thereon, or both, to certain tax-exempt organizations."

Neither the Artist-Museum Partnership Act nor tax exemptions for artists are new ideas. In fact, prior to 1969, artists could actually deduct the value of the work from their taxes. Afraid that artists were taking advantage of the exemption by inflating the value of their work, however, Congress put restrictions in the Tax Reform Act of 1969, thus setting down the law that exists today. The Artist-Museum Partnership Act has been introduced in every congressional session since 2003, but it has never passed.

On Feb. 10, 2009, Sen. Patrick Leahy, D-Vt., introduced the Artist-Museum Partnership Act of 2009, a bill virtually identical to the previously introduced versions. Thirteen days later, Rep. John Lewis, D-Ga., introduced the same bill in the House. According to Leahy, Congress no longer has to worry about possible abuses, because since 1969, "the government has cut down significantly on the abuse of fair market value determinations."

The bills have a long way to go, but for now, they are both under consideration of Congress. So we rate the promise In the Works.   

Sources: Office of Sen. Patrick Leahy, Introduction Of The Artist-Museum Partnership Act Of 2007 , Feb. 12, 2007.

Thomas, Library of Congress, CRS Summary of H.R. 1126 .

Thomas, Library of Congress, CRS Summary of S. 394 .