II 

109TH CONGRESS 

1ST SESSION S. 1186 

To amend the Internal Revenue Code of 1986 to provide the same capital 

gains treatment for art and collectibles as for other investment property 

and 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. 

IN THE SENATE OF THE UNITED STATES 

JUNE 7, 2005 

Mr. DOMENICI (for himself, Mr. SCHUMER, Mr. COCHRAN, Mr. ALLARD, and 

Mr. COLEMAN) introduced the following bill; which was read twice and 

referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

the same capital gains treatment for art and collectibles 

as for other investment property and 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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Art and Collectibles 

5 Capital Gains Tax Treatment Parity Act’’. 
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•S 1186 IS

1 SEC. 2. CAPITAL GAINS TREATMENT FOR ART AND COL2 LECTIBLES. 

3 (a) IN GENERAL.—Section 1(h) of the Internal Rev4 enue Code of 1986 (relating to maximum capital gains 

5 rate) is amended by striking paragraphs (4) and (5) and 

6 inserting the following new paragraphs: 

7 ‘‘(4) 28-PERCENT RATE GAIN.—For purposes of 

8 this subsection, the term ‘28-percent rate gain’ 

9 means the excess (if any) of— 

10 ‘‘(A) section 1202 gain, over 

11 ‘‘(B) the sum of— 

12 ‘‘(i) the net short-term capital loss, 

13 and 

14 ‘‘(ii) the amount of long-term capital 

15 loss carried under section 1212(b)(1)(B) to 

16 the taxable year. 

17 ‘‘(5) RESERVED.—.’’. 

18 (b) EFFECTIVE DATE.—The amendment made by 

19 this section shall apply to taxable years beginning after 

20 December 31, 2004. 

21 SEC. 3. CHARITABLE CONTRIBUTIONS OF CERTAIN ITEMS 

22 CREATED BY THE TAXPAYER. 

23 (a) IN GENERAL.—Subsection (e) of section 170 of 

24 the Internal Revenue Code of 1986 (relating to certain 

25 contributions of ordinary income and capital gain prop-
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1 erty) is amended by adding at the end the following new 

2 paragraph: 

3 ‘‘(7) SPECIAL RULE FOR CERTAIN CONTRIBU4 TIONS OF LITERARY, MUSICAL, ARTISTIC, OR SCHOL5 ARLY COMPOSITIONS.— 

6 ‘‘(A) IN GENERAL.—In the case of a quali7 fied artistic charitable contribution— 

8 ‘‘(i) the amount of such contribution 

9 taken into account under this section shall 

10 be the fair market value of the property 

11 contributed (determined at the time of 

12 such contribution), and 

13 ‘‘(ii) no reduction in the amount of 

14 such contribution shall be made under 

15 paragraph (1). 

16 ‘‘(B) QUALIFIED ARTISTIC CHARITABLE

17 CONTRIBUTION.—For purposes of this para18 graph, the term ‘qualified artistic charitable 

19 contribution’ means a charitable contribution of 

20 any literary, musical, artistic, or scholarly com21 position, or similar property, or the copyright 

22 thereon (or both), but only if— 

23 ‘‘(i) such property was created by the 

24 personal efforts of the taxpayer making 
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1 such contribution no less than 18 months 

2 prior to such contribution, 

3 ‘‘(ii) the taxpayer— 

4 ‘‘(I) has received a qualified ap5 praisal of the fair market value of 

6 such property in accordance with the 

7 regulations under this section, and 

8 ‘‘(II) attaches to the taxpayer’s 

9 income tax return for the taxable year 

10 in which such contribution was made 

11 a copy of such appraisal, 

12 ‘‘(iii) the donee is an organization de13 scribed in subsection (b)(1)(A), 

14 ‘‘(iv) the use of such property by the 

15 donee is related to the purpose or function 

16 constituting the basis for the donee’s ex17 emption under section 501 (or, in the case 

18 of a governmental unit, to any purpose or 

19 function described under section 501(c)), 

20 ‘‘(v) the taxpayer receives from the 

21 donee a written statement representing 

22 that the donee’s use of the property will be 

23 in accordance with the provisions of clause 

24 (iv), and 
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1 ‘‘(vi) the written appraisal referred to 

2 in clause (ii) includes evidence of the ex3 tent (if any) to which property created by 

4 the personal efforts of the taxpayer and of 

5 the same type as the donated property is 

6 or has been— 

7 ‘‘(I) owned, maintained, and dis8 played by organizations described in 

9 subsection (b)(1)(A), and 

10 ‘‘(II) sold to or exchanged by 

11 persons other than the taxpayer, 

12 donee, or any related person (as de13 fined in section 465(b)(3)(C)). 

14 ‘‘(C) MAXIMUM DOLLAR LIMITATION; NO

15 CARRYOVER OF INCREASED DEDUCTION.—The 

16 increase in the deduction under this section by 

17 reason of this paragraph for any taxable year— 

18 ‘‘(i) shall not exceed the artistic ad19 justed gross income of the taxpayer for 

20 such taxable year, and 

21 ‘‘(ii) shall not be taken into account in 

22 determining the amount which may be car23 ried from such taxable year under sub24 section (d). 
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1 ‘‘(D) ARTISTIC ADJUSTED GROSS IN2 COME.—For purposes of this paragraph, the 

3 term ‘artistic adjusted gross income’ means 

4 that portion of the adjusted gross income of the 

5 taxpayer for the taxable year attributable to— 

6 ‘‘(i) income from the sale or use of 

7 property created by the personal efforts of 

8 the taxpayer which is of the same type as 

9 the donated property, and 

10 ‘‘(ii) income from teaching, lecturing, 

11 performing, or similar activity with respect 

12 to property described in clause (i). 

13 ‘‘(E) PARAGRAPH NOT TO APPLY TO CER14 TAIN CONTRIBUTIONS.—Subparagraph (A) shall 

15 not apply to any charitable contribution of any 

16 letter, memorandum, or similar property which 

17 was written, prepared, or produced by or for an 

18 individual while the individual is an officer or 

19 employee of any person (including any govern20 ment agency or instrumentality) unless such 

21 letter, memorandum, or similar property is en22 tirely personal. 

23 ‘‘(F) COPYRIGHT TREATED AS SEPARATE

24 PROPERTY FOR PARTIAL INTEREST RULE.—In 

25 the case of a qualified artistic charitable con-
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1 tribution, the tangible literary, musical, artistic, 

2 or scholarly composition, or similar property 

3 and the copyright on such work shall be treated 

4 as separate properties for purposes of this para5 graph and subsection (f)(3).’’. 

6 (b) EFFECTIVE DATE.—The amendment made by 

7 this section shall apply to contributions made after the 

8 date of the enactment of this Act in taxable years ending 

9 after such date. 

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