Today's Wall Street Journal has an article on the "Schumer-Grassley plan" to amend the fractional gift rules. It says "the senators could attach the changes to other tax legislation by the end of the year."
Since the story goes over a lot of the same ground as Stephanie Strom's piece in the New York Times last week (discussed here), I don't have much to add. But a couple of observations.
First, there is this passage:
"The Schumer-Grassley plan would ease some of these restrictions, but would add others, according to the people briefed on the negotiations. Collectors would once again be allowed to take bigger deductions over time as their art appreciated. But higher art values, for tax purposes, would be restrained by any deductions taken previously, under one option being discussed. For example, say a donor gave 10% of a painting valued at $100,000. For that initial gift, the donor could deduct $10,000. But when calculating the next deduction for a partial gift in a later year, the painting would be valued at only 90% of its fair-market value. If in the later year the market valued it at $200,000, the IRS would peg its taxable worth at $180,000."
But that's exactly what the IRS should peg its taxable worth at! If the donor then gives another 10% interest in the painting, that would be 1/9th of what's left, or $20,000 (the same as 10% of $200,000). So I don't see how this is supposed to be a "restriction" that "restrains" the value of the subsequent donation in any way.
The other thing that I think it's worth mentioning is that, though the story starts off by saying that "in the meantime [i.e., until the Schumer-Grassley fix is enacted], wealth advisers are steering donors away from fractional giving and toward an array of other complex art-giving vehicles, such as charitable-remainder trusts and donor-advised funds," in general those vehicles are decidedly inferior to fractional-giving, primarily because, in the former, the deduction will be limited to the donor's tax basis in the work (usually what she paid for it), as opposed to its current fair market value. The story does get around, near the end, to mentioning this distinction, but I don't think it accurately conveys what a huge difference it can make.