Wednesday, December 19, 2007

Fractional gift news

The New York Times reported last week on a major "fractional and promised" gift to the Los Angeles County Museum of Art. As originally published, the article erroneously described an aspect of the current law governing fractional gifts, which led to the following correction being appended to the story:

"Because of an editing error, an article...about a promised gift of 130 artworks from Janice and Henri Lazarof to the Los Angeles County Museum of Art included an outdated reference to tax law governing partial donations....Under the current law, the tax deduction for partial gifts does not rise from year to year if works appreciate in value. Thus donors no longer benefit from bigger deductions for such appreciation."

Lee Rosenbaum wonders "how was it that the Lazarofs were willing to make such a major fractional and partial gift in the current unfavorable tax climate for this type of donation, which museum officials claim has essentially frozen this form of largesse?" The answer, it seems, is that technical corrections have at last been introduced in Congress that will fix the problematic estate and gift tax consequences that were created by the enactment of the new law last year. I'm told by a lobbyist close to the negotiations that the corrections have bipartisan support and have already been vetted by the Treasury, so it's assumed by all concerned that they will eventually be enacted, and with an effective date retroactive to the date the original legislation took effect, thus covering the Lazarofs' gift to LACMA.