Tax Breaks for Art Gifts Benefit Everyone

LETTERS TO THE EDITOR

To the Editor:

Pablo Eisenberg (“Congress Should End Special Tax Breaks for Art Gifts,” Opinion, October 12) is woefully out of touch with the realities of art museums. We struggle constantly to add to the legacy of art that public institutions share with a broad audience.

Mr. Eisenberg seems convinced that all museum donors are “multimillionaires and billionaires” whose efforts should not be directed to sharing their art collections, but instead should “focus on how to support a society that permitted them to amass all their wealth.”

In fact, this is exactly what donors who contribute their valuable works of art to the American public are doing — supporting and making available to the public the noblest endeavors of a creative society for all to enjoy. Forever. It is a concept that Mr. Eisenberg should applaud — private wealth becomes public wealth.

Mr. Eisenberg is not only mistaken about the range of people who make fractional gifts, but also about access to these gifts. Mr. Eisenberg suggests that fractional giving has “delayed often for many years the public’s access to works of art.”

On the contrary, for many collectors of relatively modest means, it has provided a tax-planning device that made it possible for them to become benefactors, rather than clients of the auction houses.

At the Speed Art Museum, patrons who have taken advantage of the fractional-gift device have been, essentially, middle- and upper-middle-class folk — a doctor and his wife, a contractor, and a physical therapist, among others.

They have all been passionate and astute collectors, who generously wanted to share their collections with their community. The late Jimmie Codell, from Winchester, Ky., developed one of the world’s most complete collections of the work of the innovative 18th-century English silversmith Matthew Boulton. In 1993, he made a fractional gift to the museum of this 208-piece collection and thereafter the museum continuously exhibited portions of it.

Since his death in 2004, the entire collection has come to the art museum. Mr. Codell was able to enjoy his collection in the last 11 years of his life, and the museum had complete access to whatever it wanted to put on view.

A retired physical therapist in Louisville developed a collection, over several decades, of the work of the 16th-century German printmaker Hans Sebald Beham.

He has given it to the museum, ensuring not only that the collection stays together, but also that it is available to be studied by students at the University of Louisville and appreciated by anyone fascinated by the rich imagery of the Northern Renaissance.

Without the ability to make this fractional gift, the donor would most likely not have been able to afford to donate his collection and the public would have had no access to it.

The revisions in the fractional-gift law insist that the donations be completed in 10 years, any appreciation in the value of art over that period be disallowed, and substantial possession of the work of art at the time of the gift must be taken without any exceptions.

One of the most wonderful fractional gifts given to the Speed Art Museum is an 850-pound glass sculpture and granite pedestal by the Czech artist Ivan Mares. It has the dangerous combination of extreme weight and extreme fragility. Moving it between the museum and the donor’s home could endanger the work, and cost thousands of dollars for a well-trained rigging team.

Nonetheless, the museum plans periodic special exhibitions to showcase its fractional gifts, including this one, but, until now, the museum was not compelled to put them on view out of context — which will be the net result of the new legislation.

There are two big losers in the recent revisions to the fractional-gift law.

The first is the public, who will find fewer of the treasures in their local museums, where such gifts have given joy to millions of museumgoers in the past.

The second great loser is common sense: The changes in the law will impoverish the American people at a time when access to collections and the intellectual capital they represent is needed the most.

Peter Morrin
Director
Speed Art Museum
Louisville, KY

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To the Editor:

Pablo Eisenberg’s argument in favor of the new restriction on fractional giving is not only misguided but is tainted with an unnecessary political bias that is out of place in such an article.

In his defense of the new restriction, Mr. Eisenberg admonishes museum directors for their opposition, accusing them of a “purely self-interested view of the tax laws.” To the contrary, museum directors are “self”-interested in expanding their art collections, now made decidedly difficult by this new provision.

Not only does the new law dismiss any appreciation of the artwork following the gift of the initial fractional interest — limiting a donor’s income-tax deduction — but a donor could end up owing gift and estate taxes if the artwork appreciates. As the noted attorney and gift-planning expert Conrad Teitell recently wrote: “A donor who gives a painting shouldn’t get a shellacking. It is hard to believe that Congress intended these harsh rules.”

Mr. Eisenberg undermines his credibility when he states, “Most other charitable gifts don’t come with the flexibility and big write-offs available for artworks.”

But examples of such gifts abound. Look at charitable remainder trusts or retained life estates, which are flexible and provide significant deductions for donors.

Most troubling of all is the unnecessary political rhetoric that was inserted into an opinion piece on fractional giving. Mr. Eisenberg’s language — referring to a tax cut as “unfair” or to the concept of fractional giving as a “tax boondoggle” — seems highly out of place. And his presumption of what millionaires and billionaires should “worry about” or “focus on” is irrelevant to a discussion on the merits of the new provision.

On top of having to pay a disproportionate share of taxes, the wealthy continue to make large, significant gifts to their favorite causes, something that should be praised. Fairness would dictate that Congress pass a correction to the new law that allows the income-tax deduction of fractional interests to reflect increases in the artwork’s value. And personal politics ought to be left out of the debate.

Juan C. Ros
Planned-Giving Specialist
Simi Valley, Calif.

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To the Editor:

Donors and charities really know how to shoot themselves in the foot when it comes to dealing with Congress. When recent legislation limited deductions of fractional gifts of art, many people associated with museums were upset. Their anger would be more justified, however, if it weren’t wrapped in greed.

And it’s that greed that gives Pablo Eisenberg an opening to contend that Congress did not go far enough, that no deduction should be permitted for a fractional interest in art. But Mr. Eisenberg’s premise is slightly off.

Who can argue with the premise that a donor ought to receive a deduction for the value of what he or she donates to charity? That’s all the law relating to gifts of art used to do. The donor deducted what was donated for its value at the time of donation. What inspired Congress to act was an abuse of the law, the not-so-secret goal of a person teaming up with a museum to “give” an asset that really isn’t being given at all.

The goal isn’t secret in large part because of people like the wealthy collector Agnes Gund, quoted in The New York Times, and re-quoted by Mr. Eisenberg, who said that lots of people want to “enjoy the work and not give it away very soon.” She was referring to something that has already been donated. But nobody buys that line of thinking.

Attacking greed, however, isn’t a replacement argument. There are reasons a deduction for fractional interests of art have been part of the tax code for a long time: You can’t rip a Degas into pieces, like you can a stock portfolio. Fractional and undivided interests are strong and viable concepts — they keep the all-or-nothing extremes out of the equation. Mr. Eisenberg’s goal of eliminating deductions for fractional gifts of art would be a disservice to the general public.

These days, with humanitarian causes providing strong donation competition to the arts world, it’s fashionable to see museums as charities only for the rich, but that’s not true. Museums are the public’s — everyone’s — link to a cultural experience that we would not have in their absence. Yes, food and shelter are important staples — and far too few people in our society have enough of either — but while we’re addressing the issues of the homeless, let’s not denigrate the value of culture.

Doug White
Planned-Giving consultant
Washington, D.C.