II 

108TH CONGRESS 

1ST SESSION S. 242

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 

JANUARY 29, 2003

Mr. DOMENICI (for himself and Mr. BENNETT) 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’’. 
2

•S 242 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 (5) and (6) and 

6 inserting the following new paragraph: 

7 ‘‘(5) 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 (b) CONFORMING AMENDMENTS.—

18 (1) Section 1(h)(9) of the Internal Revenue 

19 Code of 1986 is amended by striking ‘‘collectibles 

20 gain, gain described in paragraph (7)(A)(i),’’ and in21 serting ‘‘gain described in paragraph (7)(A)(i)’’. 

22 (2) Section 1(h) of such Code is amended by re23 designating paragraph (12) as paragraph (6). 

24 (c) EFFECTIVE DATE.—The amendments made by 

25 this section shall apply to taxable years beginning after 

26 December 31, 2002.
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1 SEC. 3. CHARITABLE CONTRIBUTIONS OF CERTAIN ITEMS 

2 CREATED BY THE TAXPAYER. 

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

4 the Internal Revenue Code of 1986 (relating to certain 

5 contributions of ordinary income and capital gain prop6 erty) is amended by adding at the end the following new 

7 paragraph: 

8 ‘‘(7) SPECIAL RULE FOR CERTAIN CONTRIBU9 TIONS OF LITERARY, MUSICAL, ARTISTIC, OR SCHOL10 ARLY COMPOSITIONS.—

11 ‘‘(A) IN GENERAL.—In the case of a quali12 fied artistic charitable contribution—

13 ‘‘(i) the amount of such contribution 

14 taken into account under this section shall 

15 be the fair market value of the property 

16 contributed (determined at the time of 

17 such contribution), and 

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

19 such contribution shall be made under 

20 paragraph (1). 

21 ‘‘(B) QUALIFIED ARTISTIC CHARITABLE

22 CONTRIBUTION.—For purposes of this para23 graph, the term ‘qualified artistic charitable 

24 contribution’ means a charitable contribution of 

25 any literary, musical, artistic, or scholarly com-
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1 position, or similar property, or the copyright 

2 thereon (or both), but only if—

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

4 personal efforts of the taxpayer making 

5 such contribution no less than 18 months 

6 prior to such contribution, 

7 ‘‘(ii) the taxpayer—

8 ‘‘(I) has received a qualified ap9 praisal of the fair market value of 

10 such property in accordance with the 

11 regulations under this section, and 

12 ‘‘(II) attaches to the taxpayer’s 

13 income tax return for the taxable year 

14 in which such contribution was made 

15 a copy of such appraisal, 

16 ‘‘(iii) the donee is an organization de17 scribed in subsection (b)(1)(A), 

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

19 donee is related to the purpose or function 

20 constituting the basis for the donee’s ex21 emption under section 501 (or, in the case 

22 of a governmental unit, to any purpose or 

23 function described under section 501(c)), 

24 ‘‘(v) the taxpayer receives from the 

25 donee a written statement representing 
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1 that the donee’s use of the property will be 

2 in accordance with the provisions of clause 

3 (iv), and 

4 ‘‘(vi) the written appraisal referred to 

5 in clause (ii) includes evidence of the ex6 tent (if any) to which property created by 

7 the personal efforts of the taxpayer and of 

8 the same type as the donated property is 

9 or has been—

10 ‘‘(I) owned, maintained, and dis11 played by organizations described in 

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

13 ‘‘(II) sold to or exchanged by 

14 persons other than the taxpayer, 

15 donee, or any related person (as de16 fined in section 465(b)(3)(C)). 

17 ‘‘(C) MAXIMUM DOLLAR LIMITATION; NO

18 CARRYOVER OF INCREASED DEDUCTION.—The 

19 increase in the deduction under this section by 

20 reason of this paragraph for any taxable year—

21 ‘‘(i) shall not exceed the artistic ad22 justed gross income of the taxpayer for 

23 such taxable year, and 

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

25 determining the amount which may be car-
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1 ried from such taxable year under sub2 section (d). 

3 ‘‘(D) ARTISTIC ADJUSTED GROSS IN4 COME.—For purposes of this paragraph, the 

5 term ‘artistic adjusted gross income’ means 

6 that portion of the adjusted gross income of the 

7 taxpayer for the taxable year attributable to—

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

9 property created by the personal efforts of 

10 the taxpayer which is of the same type as 

11 the donated property, and 

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

13 performing, or similar activity with respect 

14 to property described in clause (i). 

15 ‘‘(E) PARAGRAPH NOT TO APPLY TO CER16 TAIN CONTRIBUTIONS.—Subparagraph (A) shall 

17 not apply to any charitable contribution of any 

18 letter, memorandum, or similar property which 

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

20 individual while the individual is an officer or 

21 employee of any person (including any govern22 ment agency or instrumentality) unless such 

23 letter, memorandum, or similar property is en24 tirely personal. 
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1 ‘‘(F) COPYRIGHT TREATED AS SEPARATE

2 PROPERTY FOR PARTIAL INTEREST RULE.—In 

3 the case of a qualified artistic charitable con4 tribution, the tangible literary, musical, artistic, 

5 or scholarly composition, or similar property 

6 and the copyright on such work shall be treated 

7 as separate properties for purposes of this para8 graph and subsection (f)(3).’’. 

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

10 this section shall apply to contributions made after the 

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

12 after such date.

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