In The Art Newspaper, Jason Edward Kaufman reports:
"For the fifth consecutive session of the US Congress, a bill has been introduced that would allow artists to deduct the fair market value of works of their own creation from their taxes, if they donate them to museums and libraries. Existing provisions enable collectors to deduct the value of donated art, but artists can deduct only the cost of supplies such as canvas and paint."
As the article notes, artists used to be able to deduct from their taxable income the full fair market value of contributed works. Since 1969, however, the deduction has been limited to the artist's "basis" in the work -- essentially, the cost of her materials.
"The Senate has approved the bill five times since it was first introduced in 1999, but the House of Representatives never sanctioned the measure. The art museum association hopes to attach the bill to tax legislation before this session of Congress closes at the end of 2008."
You can read, and track, the bill, the Artist-Museum Partnership Act, here. A statement from Senator Leahy, co-sponsor of the bill, is here.