At this year’s Western Museums Association Annual Meeting, I had the great pleasure of joining Carolyn Hojaboom and Leslie Richardson, both CPAs with Moss Adams, for a panel presentation on "Legal Issues in Accounting." My portion of the program focused on the topic of fractional gifts, a hot topic in museum administration since changes in the law introduced by the Pension Protection Act of 2006 ("PPA") virtually ended the practice of fractional gifts.
My PowerPoint presentation on fractional gifts is available here: Download legal_issues_in_accounting_wma.ppt.
Not on the PowerPoint but included in my presentation was a summary of my brief discussion with a senior staff person at the Association of Art Museum Directors (AAMD), an organization that has been expending great effort and resources to lobby for changes in the fractional gift laws. Reportedly, a bill is in the works that will introduce the following changes:
- A fair market value deduction at the time of the fractional gift subject to review, upon a certain threshold amount, by the Art Advisory Panel.
- A recapture deadline (by which time the gift of the donor’s entire interest must be completed and the museum must take substantial physical possession, and make related use, of the work) of the lesser of (a) greater than 10 years (such number of years has yet to be determined), or (b) 9 months after the donor’s death.
In addition, technical corrections are expected to rectify the mismatch problem described by Donn Zaretsky, author of the Art Law Blog, that may subject the estate of a donor of a fractional gift to estate taxes for property that has been completely and entirely gifted to a charity (there are similar gift tax issues as well). You can read more about this in the attached PowerPoint and at the Art Law Blog here.