I 
109TH CONGRESS 
1ST SESSION H. R. 2786 
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 schol-
arly compositions created by the donor. 
IN THE HOUSE OF REPRESENTATIVES 
JUNE 7, 2005 
Mr. REYNOLDS (for himself and Mr. THOMPSON of California) introduced the 
following bill; which was referred to the Committee on Ways and Means 
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. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Art and Collectibles 
Capital Gains Tax Treatment Parity Act’’.
SEC. 2. CAPITAL GAINS TREATMENT FOR ART AND COL-
LECTIBLES. 
(a) IN GENERAL.—Section 1(h) of the Internal Rev-
enue Code of 1986 (relating to maximum capital gains 
rate) is amended by striking paragraphs (4) and (5) and 
inserting the following new paragraphs: 
‘‘(4) 28-PERCENT RATE GAIN.—For purposes of 
this subsection, the term ‘28-percent rate gain’ 
means the excess (if any) of— 
‘‘(A) section 1202 gain, over 
‘‘(B) the sum of— 
‘‘(i) the net short-term capital loss, 
and 
‘‘(ii) the amount of long-term capital 
loss carried under section 1212(b)(1)(B) to 
the taxable year. 
‘‘(5) RESERVED.—.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2004. 
SEC. 3. CHARITABLE CONTRIBUTIONS OF CERTAIN ITEMS 
CREATED BY THE TAXPAYER. 
(a) IN GENERAL.—Subsection (e) of section 170 of 
the Internal Revenue Code of 1986 (relating to certain 
contributions of ordinary income and capital gain prop-
erty) is amended by adding at the end the following new 
paragraph: 
‘‘(7) SPECIAL RULE FOR CERTAIN CONTRIBU-
TIONS OF LITERARY, MUSICAL, ARTISTIC, OR SCHOL-
ARLY COMPOSITIONS.— 
‘‘(A) IN GENERAL.—In the case of a quali-
fied artistic charitable contribution— 
‘‘(i) the amount of such contribution 
taken into account under this section shall 
be the fair market value of the property 
contributed (determined at the time of 
such contribution), and 
‘‘(ii) no reduction in the amount of 
such contribution shall be made under 
paragraph (1). 
‘‘(B) QUALIFIED
ARTISTIC
CHARITABLE 
CONTRIBUTION.—For purposes of this para-
graph, the term ‘qualified artistic charitable 
contribution’ means a charitable contribution of 
any literary, musical, artistic, or scholarly com-
position, or similar property, or the copyright 
thereon (or both), but only if— 
‘‘(i) such property was created by the 
personal efforts of the taxpayer making
such contribution no less than 18 months 
prior to such contribution, 
‘‘(ii) the taxpayer— 
‘‘(I) has received a qualified ap-
praisal of the fair market value of 
such property in accordance with the 
regulations under this section, and 
‘‘(II) attaches to the taxpayer’s 
income tax return for the taxable year 
in which such contribution was made 
a copy of such appraisal, 
‘‘(iii) the donee is an organization de-
scribed in subsection (b)(1)(A), 
‘‘(iv) the use of such property by the 
donee is related to the purpose or function 
constituting the basis for the donee’s ex-
emption under section 501 (or, in the case 
of a governmental unit, to any purpose or 
function described under section 501(c)), 
‘‘(v) the taxpayer receives from the 
donee a written statement representing 
that the donee’s use of the property will be 
in accordance with the provisions of clause 
(iv), and
‘‘(vi) the written appraisal referred to 
in clause (ii) includes evidence of the ex-
tent (if any) to which property created by 
the personal efforts of the taxpayer and of 
the same type as the donated property is 
or has been— 
‘‘(I) owned, maintained, and dis-
played by organizations described in 
subsection (b)(1)(A), and 
‘‘(II) sold to or exchanged by 
persons other than the taxpayer, 
donee, or any related person (as de-
fined in section 465(b)(3)(C)). 
‘‘(C) MAXIMUM DOLLAR LIMITATION; NO 
CARRYOVER OF INCREASED DEDUCTION.—The 
increase in the deduction under this section by 
reason of this paragraph for any taxable year— 
‘‘(i) shall not exceed the artistic ad-
justed gross income of the taxpayer for 
such taxable year, and 
‘‘(ii) shall not be taken into account in 
determining the amount which may be car-
ried from such taxable year under sub-
section (d).