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192. s. 405, 111th cong. � 2(a) (2009). large deduction after donating his vice-presidential papers.18 market deduction, 2004 utah l. rev. 1045, 1054-55 (2004) ("the charitable suggested above, each party may not have the same goals. this situation leads to concessions on both sides as the parties work to an agreement that benefits relationships with donors in which donors would begin donations case of the hypothetical painter, the level of protection the law appraisal.37 book to the library of congress, ensuring that future academics teaching salary and, presumably, the royalties. depending on the operational expenses, a process that has been somewhat incentivizes multiple gifts of the same work, in a sense creating a 186. see supra note 164 and accompanying text. find that their interests and the interests of the artists are not with the understanding that whole ownership would eventually museums shape their collections.89 259-60 (d. mass. 2008). collector giving followed additional changes to the tax code in furthermore, the copyright itself would be eligible for the necessary legal and business skill sets to manage the interrelated occasionally, changes in must be, with certain exceptions, the sole owner of the donated rather than complex fact patterns involving of collectors.131 the tax reform act of 196917 motivation that gave rise to the tax reform act and a recognition the metropolitan museum not the only high-profile incidents occurring in new york during this period: a 147. see nguyen & maine, supra note 12, at 1745 ("by granting an generally, the tax code fosters a symbiotic relationship 109. see id. at 382-87. of deaccession as a major issue in the museum community 37. follas, supra note 36, at 1790. courts to view vara's limited protections as enumerated, thus art advisory panel," that make these concerns redundant and have significant infrastructure costs,215 for the novelist. under the proposed rules, the novelist could museums). 18. bell, supra note 4, at 542. leading up the tax reform act.160 donee museum in the painter hypothetical might insist that the simply have no one to advocate for them. including an expensive appraisal, a small market presence, and an no carryover.143 artists have tended to retain possession of their work or to sell their dame l. rev. 1779, 1789 (2008). the maximum deduction available under the act as no more than 68. white, supra note 8, at 1045. physical art object in their private home.46 cases, subjecting them to review by the internal revenue service's 138. id. expectations regarding an institutional code of ethics 2 (2005), conflicts over vara claims.207 expectations regarding mission 2 (2005), available at http://www.aam- first time in recent memory. the act would push the cultural for these artists, fr�ngsmyr ed., 2004), available at http://nobelprize.org/nobel_prizes/literature/ sort of goods contemplated by the deduction,14 example, the installation in question was not afforded any chicago, was based entirely on gifts from chicago's leading art favored the ultra-wealthy as those most likely to have access to the believed that the problem of overvaluation would continue charity."22 recognize a distinction between the aborted project in b�chel and works such as the lower appraisal.57 203. mass. museum of contemporary art v. b�chel, 565 f. supp. 2d 245, article will feature an analysis of the act as a nexus between finally, the ppa imposed a "recapture" of the license agreement. collectors, the dominate donors under the status quo, are not 160. additional estate and gift tax issues: hearings before the another possibility is that museums will reexamine their criteria 217. see supra note 98-102 and accompanying text. have their name associated with work they did not produce, and to 63. see follas, supra note 36, at 1798. 173. see supra note 34 and accompanying text. in the meantime, the the choice of either her original plan to split the donation between the library of proofs and not the copyright to the work, she is still free to benefit offending action.150 would be reduced by the amount by which the creator would have 106. 26 u.s.c. � 170(f)(3)(a) (2006). see also rhodes, supra note 28, at the tax court rejected the irs's argument and an arbitration board would be available for any collecting institutions carry out their development plans. liability under those terms, and the need for the parties involved to study its collections, in exchange for a promise that the future donation of the subsections (c) and (d) of the new paragraph work in concert to 108. see rigamonti, supra note 107, at 353-54. interests in the donated work.179 83. see wagner, supra note 11, at 779 (outlining how this tax strategy might i(b)(10) (2008), available at http://www.imamuseum.org/sites/default/files/fin for authors of certain works.111 the picture that emerges from these hypotheticals is an around private disputes,123 the purpose of this article is to explore a possible nexus 122. mass. museum of contemporary art v. b�chel , 565 f. supp. 2d 245, might face under the proposed rules. 80. nguyen & maine, supra note 12, at 1729. collection featuring work dating as far back as the beginning of the last century. 2009] artist-museum partnership act 123 facilities and risk management (2007), available at http://www.aam- some of those restrictions are likely to involve contractual of art deaccessions occurred between 1971 and 1973. id. at 221. the museum art increased, the donor gained the benefit of that increase through amendments in three senate bills.127 125. e.g. b�chel, 565 f. supp. 2d 245. museum collections are seen at all because they would not have ready access to appraisals or case w. res. l. rev. 536, 538-39 (1987). thus incentivizing charitable giving.148 134. artist museum partnership act, s. 405, 111th cong. � 2(a) (2009). the donations, giving the artist an advantage in any such negotiations. 202. see supra notes 107, 111 and accompanying text. strike a perfect balance. the act purports to right an inequity that 107. cyrill p. rigamonti, deconstructing moral rights, 47 harv. int'l l.j. accountability.76 subject to the provisions of vara in the context of caring for and into the pension protection act of 2006.51 congress and the university, or the possibility of adding value to the second 101. see gabor, supra note 2, at 1014 ("[s]ome believe museums are anning%20ace%20(2005).pdf. possibility of charitable donations, the act increases the level of this has remained the status quo with 174. artist museum partnership act, s. 405, 111th cong. � 2(a) (2009). this strategy, known as "fractional giving," came into the teaching subject got from the donated work, the less likely the deduction possession within ten years of the initial gift or upon the donor's fact never took possession of the paintings.41 sophistication artists will have to obtain in order to protect their 175. though one can imagine analogous scenarios in other art forms as well. entities.3 2009] artist-museum partnership act 105 subsequent donations of the work 211. see cromer, supra note 65, at 780. 108 depaul j. art, tech. & ip law [vol. xx:1 market demand and high appraisal valuations. academic artists, however, the work is sold and the proceeds folded back into the revenue act aligned the federal tax code to reflect the tradition of reasonable to expect that collector gifts would be comparatively might decide to donate the copyright to the university that has specific, ethical, and realistic mechanism for developing their law: taking stock and looking ahead, 1 j. int'l media & ent. l. 253, 262-63 evolve to fit the needs of their mission.79 infra note 77 and accompanying text. donations of the same creation. just as is the case with collectors congress to simply remove the provision that allows separately during a senate hearing in 1981, the library's music division other parties and that the appraiser does not otherwise stand to gain from the determined by a qualified appraisal.165 are no different. for example, in the 2008 fiscal year, the art actions culminating in the act. claiming the purchase as a business expense.83 collecting institutions.192 cromer, note, don't give me that!: tax valuation of gifts to art museums, 63 in massachusetts museum of contemporary art v. b�chel, for them.198 corresponding benefit of deducting the appreciated value and if these determinations do not trigger the full protection of artists totaling 28 works of art.156 organization takes possession of the donation.193 directly legislating a more appropriate form. dillinger, supra note 35, at 1062- options a museum has as it develops its collection are limited. taken to an assuring that the work is available for public viewing or restricting 183. this has the added benefit of a convenient appraisal yardstick: the value historically, the federal government has supported this role in this way, the part of taxpayers.147 between these elements of the art world. that nexus takes the her galley proofs to the university instead of to the library of congress. the divide the possessory interests of their work under the proposed 13. nguyen & maine, supra note 12, at 1744-45. fractional gift depending on changes to his or her income, the indeed, the library experienced a huge drop in artist donations through tax incentives for charitable donations to tax-exempt complicate this adaptation. therefore, in order to claim a charitable-giving market and would have to structure donations artists.157 copy of which must be included in the artist's income tax return rights, museums may have to accept an increase in restricted changes to the tax code during the late 1960's, drafts, from which the novelist and her estate can later extract would be a more fair tax standing for artists and more access to from a particular sale for the purchase of some other specific deduction as we know it today by allowing individual taxpayers to en masse. they are used in the proofreading process to make any last minute established a system by which private investment in the public that treat copyrights and physical manifestations of a work as of the legislation requires examining the patterns of behavior the sales and charitable after-tax cash donations by not treating the the act would allow artists to take the same fair market tax these provisions came about after a newspaper article highlighting 54. wieczorek, supra note 14, at 103. whose work conceptually requires that a piece go through changes over a period upkeep. sale or use of property created by the personal efforts of the been successful largely because museums have encouraged ethical standards that have guided their treatment of works of art in released to the public. see e.g., matthew creasley, manuscripts and affirmations of the artist's moral rights in the form of expensive single copy, in a limited edition of 200 copies or fewer that are charitable-deduction regime. one was the practice of politicians both programs,71 case. deductions without relinquishing physical possession of the museums1 deduction to their evolving income situation and maintaining the dynamics of the new charitable-giving regime those incentives 133. 155 cong.rec. 2082 (2009) (statement of senator bennett). tend to be fractional gifts from wealthy donors. id. at 1782. museums may in fact find themselves forced to actively protect 190. see supra text accompanying notes 170-71. 114 depaul j. art, tech. & ip law [vol. xx:1 a c. the visual artist rights act could donate a fraction of undivided interests in art, carry over the expectations regarding collections stewardship 2 (2005), available at 22. compare id., with h.r. rep. no. 91-413, at 47 (1969), reprinted in 1969 acquisitions" totaled approximately $1.9 million. id. what emerges is a picture donors transfer their entire interest in a work, including physical museum operating expenses, 94 mich. l. rev. 1041, 1042-43 (1996). it is notable that other institutions with publically restrictions have the potential to be overly burdensome.213 172. 17 u.s.c. � 202 (2006). the art advisory panel that reviews high value donations from 144. id. who might want to take moral rights that have the effect of restrictions. for example, these that both parties are on equal footing in situations in which the term and changing needs of the artist's estate.184 this has serious as embodied in vara, strengthens those rights by specifying that is, artists who supplement or support their artistic work with exchange for donating the copyright to the museum at the end of there was some disagreement as to as belonging to the public, in order to enrich the public good.67 of the american indian deaccessions occurred in 1974. id. at 231-32. the number of factual determinations could be in play in any particular role in maintaining the public trust.66 often by earmarking proceeds involved in the process of agreeing to the terms of a charitable donation, and, as collection, state attorney generals are empowered to challenge the of her intended words.176 affirmative obligations on museums. to some extent this would 167. s. 405, 111th cong. � 2(a) (2009). 2009] artist-museum partnership act 97 in winokur v. commissioner39 accordingly. the hypothetical painter illustrates the potential competing and in which artists contract to protect their moral were to pass, moral rights would become an issue in negotiations quickly became important both as an estate planning tool and as an with fluctuations in his income."). how a taxpayer might benefit in this way). 126. see, e.g. bell, supra note 4, at 562-63 (discussing the national heritage the past and avoid the increased costs of accepting donations 45. wieczorek, supra note 14, at 97-98. artists and wealthy and give artists a tool the value of appreciable goods as the fair market value at the time 96 depaul j. art, tech. & ip law [vol. xx:1 4. impact copyright protections, rights to the physical object being 210. put another way, both the artist and the museum will be actively meaning that the complicated if a great number of the other works in a collection are also bring moral rights back to the broader pre-vara paradigm of when congress has perceived these just as a collector particular collection as collector giving drops and artist giving advertising,121 more taxpayer which is of the same type as the donated property, and . . 122 depaul j. art, tech. & ip law [vol. xx:1 36. id. at 1051-52. see also emily j. follas, note, "it belongs in a 2009] artist-museum partnership act 103 118 depaul j. art, tech. & ip law [vol. xx:1 162. id. copyright for a period of five years, during which time the painter the tax reform act.162 110. see id. at 387-92. damaged works or works of low value, destroyed.91 expanding those rights, especially if this can be done in such a way b. the modern museum and deaccession 218. if the only donations coming into a collection are recent works by living specifically separate properties for the purposes of the "partial same time so as to make clear that it is not the exclusive remedy alienating other possessory interests in the work. for instance, the the features of fractional giving, including some extreme examples copyright thereon (or both);"137 museum, take the fair market value deduction from her adjusted the charitable-giving regime functions on the principle of . . . preserv[ing] them in our public institutions."130 77. am. ass'n of museums, accreditation commission's donation meeting a certain valuation threshold designed to ensure the moral rights regime has been more strongly associated with qualified appraisal are that the appraiser is not otherwise associated with the forums has been effectively dealt with.187 congress as senate bill 405 on february 10th, 2009, by senator 55. id. at 102. her entire interest in the work, that is, both physical ownership and moral with the passage of the tax reform act, artists as a taxpayer deaccession funds constitute this development. critics of this the painter might be accustomed to dealing with museums, and 1986 by creating paragraph (8).134 automatically reviewed by the panel. anne-marie e. rhodes, big picture fine considered this a compelling reason to consider reforming the more ideal than the potential difficulties artists and museums fiduciary-duty framework for analyzing the deaccessioning of art to meet copyright to an object, or both.174 the museum, though it had a right to last five congressional sessions, and it has been passed as the proposed rules, museums will have to be able and willing to defined by the standards of the art community,118 been in a position to develop philanthropic relationships with 3. restricted giving and the criteria for deaccession artistic, or scholarly composition, or similar property, or the from her adjusted artistic gross income, which would include her through tax savings on charitable deductions than through selling 156. bell, supra note 4, at 548. market. having already entered into a posture of negotiation, 20. sen. rep. no. 91-552, at 72 (1969), reprinted in 1969 u.s.c.c.a.n. iii. the current proposed legislation deaccession occurs for a would force museums to make difficult funding decisions and may (2007) (discussing generally the importance of proofs in literary criticism and use the donation to further its mission.31 however, the incentives object and attributing the new acquisition to the original donor.96 relates to artist giving in line with the general principles of 70. id. at 220-22, 231-32. see also gabor, supra note 2, at 1021 (these were museums in these precarious negotiations. the simplest is for continuously revises or expands individual works over a long period of time, or charitable organizations' activities."). works away from private ownership,200 1051 (2008). for an example of what this might look like, consider a possible however, the adjusted basis for a work of where the could then benefit from the copyright by licensing the image to a (2006), available at http://www.artic.edu/aic/aboutus/annual_report_2006/acqu immediately deduct the fair market value of appreciable items would benefit nominally because of low appraisals and low "gross regardless of the charitable deduction regime.27 curator at the brooklyn museum unilaterally deaccessioned a number of pieces there may be alternatives to the provisions of the act that 86. art inst. of chicago, acquisitions july 1, 2005 � june 30, 2006 terms might insist on certain conditions for the storage or upkeep paint a new picture: mail. id. at 251. the directions were exceedingly vague and the museum staff similar legislation in 1954 defined the charitable documenting the extent to which his or her previous work has been still profit from the creation is itself anomalous,178 appraiser". furey, supra note 28, at 193. there are professional groups that artistic gross income, and retain the copyright to the image. she that qualifies under the artist-museum partnership act. see infra note 140 and library of congress along with the galley proofs in order to until recently received what some see as an unfairly favorable tax 26. h.r. rep. no. 91-413, at 48. between artist giving and collector giving, museums might tend to ability and tendency to incorporate as tax-exempt charitable result of the appraisal. id. at 191. consequently, appraisals can be difficult and maintaining the flexibility to adjust the donation and resulting represented in the hypothetical. for that, the painter needs a 353, 355 (2006). conceptually, there is debate as to the extent to which these 62. id. at 105. interests in the work during the interim. additionally, the novelist is limited to the physical materials the artist used in the creation of the work. afforded those rights.202 52. principally senator charles grassley. wieczorek, supra note 14, at 100. demand from collecting institutions.167 practices through its various professional organizations that precipitous decline in artist giving followed.6 157. id. 1796. also, the standards require that an accredited museum direction even under the status quo, as there has been some 197. this analysis would not apply to all museums. some collections are a taxpayer donated a percentage expensive tax liability.63 i. introduction 120. hunter v. squirrel hill assocs., inc., 413 f. supp. 2d 517, 519 (e.d. a look at specific collections confirms the its fate depends on the policy of the particular institution. it may controls. these moral rights terms might be, in addition to the by removing the incentives rather than dealing directly with the treated the same as any material created for the purpose of words, she has donated the same creation two different times to (describing the related use rule and advocating donee certification of related 205. b�chel illustrates this point. in buchel, the installation was a however, the novelist's initial donation takes an entirely different mediating between major artist donors and museum donees. like 40. id. at 734-35. 42. id. at 736, 739. related person."142 on deaccession. thus, if there were to develop a significant gap donation for the purposes of the deduction.43 litigation in the case of a future dispute. favor older pieces donated from collectors for deaccession, proposed donee. a museum may be able to offer future added san francisco museum of modern art, losing as much as eighty percent of its 149-52 (1979). v. conclusion the most recent version of the act was introduced to the 111th 7. see, e.g. maria j. lozier, new incentives to give: impacts of the 1990 depending on the methodology institutional mission and to evolve under these financial donor's complete interest in some percentage of the piece.). charitable deduction provided an important economic incentive for patentees, of time. in a sense, these works are never complete, and whether courts would mandates the act may put on museums engaged in charitable contribution" as a charitable donation "of any literary, musical, collaboration between b�chel, a well established artist, and the massachusetts taxpayer gains a deduction based on the free market value of the finance said of these situations that "[i]t appears that the government.166 likely chase the tax incentives on the advice of their tax advisors. there is reason to suspect that, if the act allowed to take, with several significant differences to be museums as a class (describing the history of philanthropy in the united states). institution.92 would have in this hypothetical. because the proposed rules de- incentive structure that favors artists over collectors while 151. see follas, supra note 36, at 1798-1800. (the effect of the ppa on of this effect.175 be shown, this is an important point because it impacts how museums will 178. see supra note 34 and accompanying text. this is anomalous in that, number of reasons, some of which implicate more difficult ethical 98. gabor, supra note 2, at 1019. supp. 2d 395, 396, 400 (e.d.n.y. 2004). the state attorney general stepped in and reviewed certain taxes). exacerbating the problem of public access and creating a potential suppose the novelist has come to the end of her academic career both. volume of artist donations to collecting institutions. artists would defined as "a painting, drawing, print, or sculpture, existing in a business manager, a lawyer, or both. inserted tax provisions50 passage of the act would open up or uncompleted works.122 50. wieczorek, supra note 14, at 91. penn. 2005). fractional giving was immediate, with some museums losing major donors, accepting donations from financial incentives have pushed an important cultural object into work the artist hopes to donate.169 an artist black's law dictionary (8th ed. 2004). here, the term is used to refer to full range of vara's protections only apply to major works and exchanged by persons other than the taxpayer, donee, or any 215. for example, if the artist specifies provisions relating to storage and form. the novelist has donated complete control of a physical 96. gabor, supra note 2, at 1012. widespread use after an important tax case in 1988.38 in order for museum collections to remain relevant to their 168. id. in order to protect the public interest in a particular museum 102 depaul j. art, tech. & ip law [vol. xx:1 123. e.g. scott, 309 f. supp. 2d 395. loopholes that led to the tax reform act and the ppa in the first 118. scott v. dixon, 309 f. supp. 2d 395, 400 (e.d.n.y. 2004). artists may be the only way for museums to develop collections of unlike the tax reform act, these provisions passed quickly with would come out of negotiations with proactively minded artist 2. see david r. gabor, deaccessioning fine art works: a proposal for collectors were treated the same under the tax code.15 place for almost twenty years, much of the case law has revolved 60. wieczorek, supra note 14, at 104. see also follas, supra note 36, at stemming from a need to adapt to the changed circumstances of and enacted with the act in place.128 the situation was even this way, the museum would have some assurances that its incentives the act provides artists and the gifting behaviors those iv. analysis when a work is deaccessioned, vara, the law will offer only limited protection to the physical continue the philanthropic relationship with further gifts related to visual arts: the composer teaching musical composition would likely qualify for 159. bell, supra note 4, at n 80. living teaching creative writing at a university. her publisher has cultivate its existing philanthropic relationships with collectors in order to property contributed (determined at the time of such interests after the transfer of other rights. this changed somewhat to collectors has endured despite repeated attempts to rectify the an unprecedented level over the last decade.80 74. id. at 233-34. 145. id. major living artists. finally, courts have interpreted vara to 158. 155 cong.rec. 2081 (2009) (statement of senator leahy). 2027, 2109-10. plus ten percent.59 negotiation and eliminate some of the difficulties related to the carryover provisions to the subsequent deduction.35 requirements of the charitable deduction to deincentivize the aspects of the amount as could a collector holding the same work at the same developments as supporting perverse incentives, it has responded framing his intervention in terms of "ensur[ing] response to those incentives, and the taxpayers' adaptation to that moral rights vest only in the author of a work and typically cannot taxpayers, often at the advice of estate tended to favor defendant institutions, and into contract law, where the amount of that contribution as "the fair market value of the 204. see id. at 246, 259. by contrast, the three year that would remove another element from the potential negotiations tradition, represented by france and germany, seems to suggest limited waiver), actions of museums towards their own collections.68 187. see supra notes 21-25 and accompanying text. 1052-53 (illustrating major fractional- giving campaigns and their benefit to copyright law by defining a qualified donation as an object, the copyrighted,103 public works,124 incentive regime that forces new works into the public trust, it is good supported democratic principles and a means of societal 73. id. at 231 (quoting james c. baughman, trustees, trusteeship, and this could result in significant tax savings. so far in this as to avoid other restrictions on use. finally, museums should more works available for deaccession is discussed infra part iv.b.4. question is what can be done with the proceeds of such a sale.94 this practice has generated create. elite artists and academic artists, in contrast, sean conley museum as an institution. it will conclude with a description of by changing the tax code such that organizations are reflections both of the federal government's 2009] artist-museum partnership act 93 basis for a theory of public ownership of museum collections). the term the driving forces of change facing museums under the 111. id., at 405. focus its mission statement on education, public service, and eliminating conflicts of interest. thus, the most important qualities of a questions, such as his status and the specific work's status in the disparate interests of artists and museums in those negotiations. maintain private standards within the industry, but there is no government hypothetical novelist might time the donation of various process of taking physical ownership.45 under i.r.c. section 501(c),64 authors of visual art works have the right "to prevent any 2009] artist-museum partnership act 115 119. phillips v. pembroke real estate, inc., 459 f.3d 128, 143 (1st cir. loophole rather than a legitimate estate planning tool, it changed the eligibility n that case, the trend consequently, library went from accepting about 200,000 artist donations a year 29. bell, supra note 4, at 539. financial planning necessary to facilitate the often expensive tax discrepancy.133 museums may be forced to reconsider the dynamics of dramatically increase artist giving. however, for any particular the historical debate surrounding deaccession has tended to it discusses the effect on the collecting institution accepting the 9. the visual artist rights act of 1990. 17 u.s.c. � 106a (2006). 2009] artist-museum partnership act 113 despite this trend, however, museums face difficult challenges as 2009] artist-museum partnership act 121 two high- at large). 149. see supra note 50 and accompanying text. other words, under the reform act, the donation of art would be the reappraisal system.47 will still be those willing to collect works of art even after the fall 1. unintended consequences from the unintended consequences of those incentives and the 116. id. � 106a(c)(1)-(2). with regard to artist giving. this section will attempt to explore the implications of the act subsection (b) of the new paragraph defines "qualified artistic alienating the work itself;105 since the tax reform act there has been 196. though, because the bill does more than restore the pre-1969 rules, the museum's expense and at b�chel's direction. id. at 250. b�chel, however, storing works that are 47. see dillinger, supra note 35, at 1051 (posing a hypothetical example of protection because it was an unfinished work.203 additionally, finally, the standards require that accredited governmental elements of both trusts and corporations.65 believe that vara, in enumerating limited moral rights, has with the passage of the visual artist rights act ("vara") in should be open to separate donations of physical objects and 2009] artist-museum partnership act 125 cannot serve as a model for this proposed artist-museum paradigm. unlimited resources. in fact, the art institute implemented a number of cost- interest rule."146 donations on a restricted basis.211 work. she could then take a deduction of the fair market value of excess deduction for up to five years, and then donate a further completeness and its purpose. many of these questions are of fractional giving. the proposed incentive structure is likely to 124 depaul j. art, tech. & ip law [vol. xx:1 conceivably have no end. completion would be determined by a subjective wash. & lee l. rev. 777, 779 (2006). both chambers argued that it was simply not the cultural objects for the general public. for the year of the donation.139 regard to collector giving. discussed the discrepancy between tax treatment of artists and that additionally, approximately $423 million in assets are in the form of property. anniversary. as part of the marketing campaign, the novelist has united states, as well as from the common law tradition generally, 31. bell, supra note 4, at 563-64. see also rhodes, supra note 28, at 190-91 2009] artist-museum partnership act 109 valuation at the time of the initial gift, unless the object loses (emphasis added). respect to property" similar to the donated property.144 may even be accustomed to dealing with entities such as digital spectrum of contemporary art at the mca, chicago (2005), available will license the painting to a commercial image gallery. in manifestation of the work while retaining control of the copyright, museum of contemporary art. id. at 251. the large piece was to be installed at museum's infrastructural resources; therefore, a museum will importance of the donor relationship to the vitality of the museum commented on the current "disincentive for artists to donate their immediately after the tax reform act.159 of as unfair tax practices.149 hypothetical, the new rules have achieved their goal in that expressed from the museum's point of view, though artists will consider deaccession as a method of paying those costs.216 be alienated.107 partnership act ("the act") would be successful in increasing the 260 (d. mass. 2008). 115. id. � 106a(d)(1), (e)(1). legislation.9 painter make a binding commitment to follow through with tradition in general or in the united states in particular.108 economically incentivizing or discouraging particular behaviors on of art and the museum of the american indian-heye foundation copyrighted object by virtue of being the author.104 analyzing james joyce's ulysses based on changes between the various proof that it has been read as the exclusive moral rights remedy. in the 216. of course, the choice of what works to deaccession becomes the donation is collectors,219 value, at which point the subsequent deduction is adjusted down to deaccessioning (2007), available at http://www.aamd.org/papers/. painter agrees to donate a painting to the museum, but retains the intervention during this same period.74 88. ass'n of art museum dirs., art museums and the practice of group of taxpayers within the artistic community. the avid the artist's income generated by his or her art.168 this has remained the status quo proposed incentives dramatically break from the status quo is in this is unclear. could derive huge benefits from the proposed rules.190 1990. provide the necessary context. part iii will set out a brief history passage of the 1969 act, the met accepted donations from 15 changes occurred in 1969. strategy it found offensive, rather than eliminating the strategy altogether or the act has major implications for artists and their relationships paragraph institutes the "qualified artistic contribution" and sets commercial entity182 these rights cannot be transferred, can only be waived by a 3. hypotheticals: the novelist and the painter offset some of the tax implications of this windfall by deducting artists and collectors were on the same tax footing: the artist painting a dark picture: the need for reform of irs practices and procedures code%20ace%20(2005).pdf. 214. see supra notes 98-102 and accompanying text. it is unclear, however, what level of bargaining power a museum of the moral right of integrity and implicating potentially "future interest."42 rigorously defending their own interests. ideally, this will lead to 91. see, e.g., indianapolis museum of art, ima � deaccession policy � 180. see s. 405, 111th cong. � 2(a) (2009). rules. a painter, for example, could donate a painting to an art create a major new philanthropic market just as the current to enforce those rights through a contractual agreement with the attenuated adjusted income. an artist would have to mitigate one the extent to which his or her previous work has been "sold to or 43. id. at 740. work.56 integrity of the donation and to his right of attribution. if the . . and to prevent any destruction of a work of recognized stature . . /articles/2009/01/26/brandeis_to_sell_schools_art_collection. 87. elizabeth a.t. smith, life death love hate pleasure pain: a object in which the work is embodied."). 76. id. of corporate art collecting, wherein companies buy art as under the status quo. it discusses the effects of the act from the commissions,125 when congress decided to throw its museums 209. see e.g., am. ass'n of museums, aam standards regarding 23. sen. rep. no. 91-552, at 72; h.r. rep. no. 91-413, at 47. charitable giving 161. id. important cultural objects. collectors, on the other hand, have deaccession. recent developments in the deaccession debate have wieczorek, supra note 14, at 103. deduction on charitable gifts of their own art that collectors are physical object.153 completely aligned. museums will have to take into account the in the act reach beyond this goal. understanding the full impact this, it is not entirely clear how museums would deploy of donations in which collectors had taken particularly large however, removed artists from the fair market value regime.5 typical restrictions involve was some semblance of a plan for the piece, and the level of signed and consecutively numbered by the author . . . [or] a still contemporary collection. broader topic of deaccession is discussed infra note 88-102 and accompanying events. having used the deduction from the donation of the galley 3. for policy justifications for government support of charitable giving, see steady changes in the system over the next fifty years.16 also need to advocate for their best interests. first, museums in light of this, it is foreseeable that the artist museum 124. e.g. phillips, 459 f.3d 128. 51. pension protection act of 2006, pub. l. 109-280, 120 stat. 780 (codified previously closed avenues of development.196 189. see supra text accompanying note 170. committee on ways and means and the senate committee on donations in a single year.). us.org/aboutmuseums/standards/upload/frmstandards.pdf. 2006 what had been an important tool became a prohibitively the donor is required to pay back the value of his or her deductions to plan the integration of the work into its collection, including the 177. see 155 cong.rec. 2081 (2009) (statement of senator leahy). of a large and healthy organization with a forward looking strategy, but without parties not established an overall conceptual plan that included some idea of that has resulted in the overall demise of artist giving. major authors, and artists to donate their patents and creative works to further alienable gifts of the same object. this is the provision that would 185. see supra note 30 and accompanying text. 97. goldstein, supra note 65, at 225. subsection (a) of the new rules, artists would have the potential to take advantage of operational costs. the object was the product of the donor's own labor, as would be specifically incentivizes. generally, an art object and the rights prudent tax and estate planning would require that the artist in 46. rhodes, supra note 28, at 195. see also wieczorek, supra note 14, at 97 immediate deduction equal to the fair market value of donated property, the the hypothetical painter generated from teaching some other, non-visual art form death, whichever is first.54 partnership act was introduced in the senate during each of the 2009] artist-museum partnership act 99 14. samuel g. wieczorek, winokur lose or draw: art collectors lose an if the donated work increases in value, the donor's estate currently, any deduction for a charitable art donation in excess of $20,000 is thing, as has been discussed, the act is limited in terms of who the new artist giving market. while the environment in which the interests of artists and museums are 2. the new incentive regime the novelist hypothetical is dramatic because of this potential completeness was not at issue.204 its name, which includes the stable of well regarded academics that manage and along the same lines, congress could expand or clarify the what it considered bad incentives.152 recently released a new edition of the book to mark its fortieth donations from collectors.151 the donor 95. white, supra note 8, at 1043. before the tax reform act to accepting a single major gift after 84. gabor, supra note 2, at 1010. 102. see white, supra note 8, at 1065. outdated.132 might donate greater or lesser portions of work in a traditional deduction on a charitable donation, a collector must donate his or actively encouraged donors to use fractional giving as a way to donate, even university would be offering the prestige of associating the first donation with further, museums should affirm their commitment to respecting 137. id. two sides of the charitable equation separately. first, it discusses 30. note, supra note 3, at 147-48. essentially this means that the deduction 53. dillinger, supra note 35, at 1045-46. 181. see rhodes, supra note 28, at 193. the artist's moral rights, even to the extent of contractually restricted giving.210 collection maintenance policies that emphasize the public nature of accounting for approximately eighty percent of all new museum museum fulfilling one of the act's stated goals.164 control of the piece in the meantime.44 painting from income generated by teaching painterly technique. the further amendment to section 57 on charitable contributions of appreciated tangible exercise its right to the collection suggested a non-deductible deaccession, and the moral rights of the artist. part iv will finally, the qualified appraisal and the opening of new markets for despite having essentially already donated the piece.62 response to a number of concerns congress had regarding the the act contains no new provisions specifically aimed at own opening remarks in which he reiterated the need to reform the contemporary art. this would seem to create demand for artist 24. h.r. rep. no. 91-413, at 48. creators could take a deduction equal to that of a collector of the older pieces, as fewer new pieces enter the private marketplace, the work must undergo a qualified appraisal, a intentional distortion, mutilation, or other modification of that the incentives for artists shifted away from donating their work living artists creating major museum pieces would have high under the status quo, donors must relinquish all interests in the donated object. as senator leahy mentioned in his introductory remarks, tend to be conflicted about this method of donation because the between artists and museums. also, with no affirmative, and the ability of elite artists to eliminate large portions of their tax visual art is the cost of materials.154 supplement its acquisition budget,95 using funds from a future deaccession of the painting for that body of cultural material thought of as belonging to the public and their gross income, and in doing so, lower their gross income for could do the same with any of the other previously mentioned could incur a tax liability for the higher value without the between private taxpayer donors and museums wherein the which both parties can realize benefit. proofs to offset earnings from the anniversary edition, she could pass to the museum, but that the donor would retain physical payments so that she earns the most income from the agreement in the passage of time or the inherent nature of the materials . . ., long as the specific subject being taught is related to the type of traditional fractional giving takes the form of gifts of undivided 94 depaul j. art, tech. & ip law [vol. xx:1 the government and by the museum community. artists and museums in a posture of negotiation. by opening the copyright with the advance on a deal to publish her memoirs. the several tax cycles through the donation of a single piece.36 property to such an extent as to incentivize giving property over the circumstances under which the work may be sold.212 b. effect on museums accelerating the shift towards using deaccession proceeds for 65. jason r. goldstein, note, deaccession: not such a dirty word, 15 the public trust and museum's dedication to public interests.101 2009] artist-museum partnership act 117 form of senate bill 405: the artist-museum partnership act.10 98 depaul j. art, tech. & ip law [vol. xx:1 finance favored reforming irs auditing procedures, because it sanctioned licensure. id. at 185-87. the few existing regulations are aimed at this in turn may force museums to make difficult stewardship sell. their choice is likely to involve the impact of market forces a fair market deduction on the donation of his or her manuscripts. 81. art inst. of chicago, report of the treasurer 43 (2008), available taxpayers could realize deductions on a greater portion of the total united states intellectual property law differentiates between proposed rules would likely be the novelty of artistic giving and matter may have to settle for less than complete ownership over by incentivizing artist giving, the act would increase the number accepted 1,200 original works by living composers in the 7 years of the act and the statutory provisions of the act. part iv of this increases. many potential artist gifts would come with restrictions organizations in general have increased their financial holdings to more amenable to the work of living artists than others, and some institutions manage their developmental strategies. in an significant tax benefits from the charitable-giving regime for the it may be that the prestige of being part of a particular collection is artist donors would likely structure such donations to achieve literary academia provides perhaps the most dramatic example note, tax treatment of artists' charitable contributions, 89 yale l.j. 144, passage of the ppa resulted in a drastic reduction in charitable and if the value of the hypothetical painter, meanwhile, might strategically manage her said for art history survey courses with a more general focus, or classes about restricted. the possibility of changing deaccession criteria in order to make institute of chicago held assets totaling over a billion dollars.81 new to museums. as a matter of ethics and to the extent that supported her and at which she has taught for decades so that the and museum 191. see supra note 182-83 and accompanying text. the philanthropist entrepreneur of the late nineteenth century and deduction is not applied to the artist's total income, but rather to transparent deaccession policies tended to avoid government artist's work has been collected by institutions similar to the museum's collection is expensive and burdensome on the 57. id. at 101. the copyright from her adjusted artistic gross income. in other for example, a painter would photography or sculpture. the deduction would certainly not apply to income with 17 u.s.c. � 106a(e)(1) (in the united states, waiver is only limited to the reevaluate their deaccession policies with a mind to affirming a take possession of the donation right away, and as a practical 21. id. redundant or no longer have an appropriate place within the contribution)."135 the effect on the artist making the hypothetical donation. second, new type of fractional giving. museum of art serves as an example. in the three years after the even though they often feature the artist's "artistic adjusted gross income" for the tax year, with 99. see goldstein, supra note 65, at 224-226. institute of chicago features nearly two hundred gifts,86 the power to control the use of funds . . . ."); xuan-thao nguyen & jeffrey a. 128. see id. decision of one or both of the parties. another example is the artist who fractional gift as the fair market value at the time of the initial 120 depaul j. art, tech. & ip law [vol. xx:1 overall discussion, while a discussion of the modern museum, new incentives might foster. investment vehicle. possessory interests in the creation as a whole. 141. id. implications for the finances of these institutions. charitable examine the effect of the act on giving generally and the implied in some circumstances, it was possible for a donor to profit more 112 depaul j. art, tech. & ip law [vol. xx:1 of view of museums, the primary effect of the act would be to carefully choosing the period of the agreement and by structuring status quo. museums would have to adapt their procedures, and giving as part of the price of entering the new artist donation at http://www.artic.edu/aic/aboutus/annual_report_2008/rpt_treasurer.pdf. value to the artist's work in exchange for the artist promising to another additionally, each subsequent donation required that the work be museums as the stewards of the public trust, and that in pursuing intention of the charitable-giving regime to reward the giving of mission statement should state what the museum does, for whom, and why.") thought of as holding these objects "in trust" for the benefit of the general 1. this article uses the term "museum" to refer to any collecting institution must be certified in writing.141 appraisals are notoriously the work are donated piecemeal. in the above hypothetical, 195. see supra note 143. work which would be prejudicial to his or her honor or reputation . this section will present a historical overview of charitable donation and the control over the donation necessary to safeguard contract style bargaining for moral rights.208 i and the passage of moral rights copyright control.106 131. id. protect their own interests, could give rise to an increase in 41. id. at 735. regardless of how the funds were to be used.218 the ethical culture of museums requires that they constantly a. effect on the artist however, it goes on to limit the for proliferated donations; however, the incentive for making serve.75 and that collector gifts would generally be the older pieces in any 110 depaul j. art, tech. & ip law [vol. xx:1 however, because she donated the galley protection act's destruction of fractional giving, 76 umkc l. rev. 1045, artists since the passage of the tax reform act.194 standards require that museums identify the community they are to contributions of artists into the public trust186 separate properties, allowing artists to make multiple valuable reaping tax benefits from the donation of materials generated is possible to alienate the copyright to a work of art without under the proposed rules, she act would serve as a repudiation of the concerns over charitable utilitarian works,120 90 depaul j. art, tech. & ip law [vol. xx:1 world of visual arts. see guy pessach, museums, digitization and copyright this as a first consideration, not every artist would benefit from the public. exclude "site-specific" works,119 subject to a deduction equal to the artist's adjusted basis in the structures by altering their economic behavior. for example, the little debate.53 8. see jennifer l. white, note, when it's ok to sell a monet: a trustee- 105. id. � 202. the donation.201 148. drennan, supra note 12, at 1054-55. the bill itself amends �170(e) of the internal revenue code of 214 (arguing that a museum is a public trust owing a fiduciary duty to the public require a fundamental change in the ethics of deaccession. in ii. background 98-100 (discussing in detail the public debate leading up to the passage of the director, unpaid furloughs, and laying off three percent of its staff. art institute 92. goldstein, supra note 65, at 213. the european civil law tradition than with the common law less than a million dollars in 2008, while assets attributable to "net art cause the most tension between artists and museums, in that it 44. see dillinger, supra note 35, at 1050-51. 11. susan e. wagner, note, the implications of changing the current law device.58 acquisition of a restricted gift or lose an important donation, composer igor stravinsky cancelled the planned donation of his on collectors who can no longer count on art collecting as an for moral rights actions, or to apply it to a wider range of artists, 163. bell, supra note 4, at 548. see also note, supra note 3, at 148. deaccession as they enter this new market of artist gifts. one many artists would either not benefit artist donations by setting neutral artistic donation standards and charitable giving, the institutional museum, the practice of donation system favored charitable donations of property over gift.61 with museums. though the act obviously intends to change the taxpayers soon found, however, that they 201. again, the literary world provides the most dramatic example. in the enactment of the act would likely have implications for museums 63 (describing the terms of the ppa). same objects.4 fractional 113. id. � 106a(a)(1)-(2). discussed below. part ii of this article will set out background 100 depaul j. art, tech. & ip law [vol. xx:1 http://www.aam-us.org/museumresources/accred/upload/collections%20stewar patrick leahy.129 serve as the curators of the public trust.2 27. sen. rep. no. 91-552, supra note 20, at 73. the ppa made several changes to the tax regime. overruling 61. wieczorek, supra note 14, at 104. multiple donations of the same object is not limited to literature or have not been a factor in charitable donations per se because suppose a hypothetical novelist gained acclaim 15. bell, supra note 4, at 538-39. affords to his work after a donation would depend on factual there is nothing in the plain language of the act to disallow being routinely overvalued.25 reaffirms the collection-as-asset concept and could result in work artists will ultimately have a choice whether to donate or to painter is a prudent donor and values his moral rights, he will seek one possibility is that a museum may use the proceeds to remove their name from work that has been modified in a way deductions were only available for transfers of undivided interests accepted a total of 30 original works.161 contract terms mirroring vara protections could impose protecting their own interests in this situation, perhaps by films: she cannot retain a right to reproduce and sell the films and still take the period before the passage of the 1969 act saw 321 pieces from 97 with some deductions taken on donations of self-created appreciable property hobbyist, craftsman, or local artist170 thus, in print: the intersection of art and tax, 26 colum. j.l. & arts 179, 197 (2003). 1. changed circumstances museum collections.85 long-term benefits of ownership while gaining considerable time appreciable objects associated with the creation. and contract110 amended in scattered sections of 26 u.s.c.). deduction from income generated by teaching more academic art theory or the public trust.177 however, the act provides some guidance. under this cycle of the creation of unintended incentives, congress's would have eliminated the fair market deduction for all charitable donations, or more of these obstacles in order to significantly benefit from the 106 depaul j. art, tech. & ip law [vol. xx:1 the copyright are distinct properties eligible for distinct deductions. the reform act placed a few limitations on collectors. it in 48. wieczorek, supra note 14, at 97-98. see also dillinger, supra note 35, at 139. id. possessory interests associated with her book to various career in the overvaluation problem28 94. see gabor, supra note 2, at 1005-06. al_ima_deaccession_policy.pdf. appraisal value of the galley proofs, which under the proposed work into private collections, potentially limiting public access to additionally, congress was concerned that such donations were artist's previous market performance in the form of sales and prior expensive to obtain. the act brings the charitable-giving regime as it vara established statutory rights of integrity and attribution even under the status quo collectors often make charitable advantage of the new incentives would face several obstacles, history classes about painting. it is an open question whether the same could be of cultural works made available to the public trust, successfully important tax break, 8 hous. bus. & tax. l.j. 90, 99 (2007). 71. goldstein, supra note 65, at 222, 231. acknowledge the special service museums provide to the public at the policy of encouraging charitable gifts. the original house version of the bill and, for the purposes of this article, most important of these attached to that object through copyright law are separately separate donations of these aspects of a work of art. thus, the act giving as it relates to art objects. then, it will discuss the modern agreement with the painter that affirms the painter's moral rights philanthropic relationships between museums and artists. recall contractual protection. there has been some movement in that 130. id. at 2081. the museum missions.78 possibility is that if the types of restrictions artists put on their gifts the first relating to fine art appraisals, 9 cardozo arts & ent. l.j. 177, 182. the exclusive rights under a copyright, is distinct from ownership of any material in the donated object.34 museums are already subject to vara, many of the terms that in his introductory remarks, senator leahy 69. goldstein, supra note 65, at 220-22, 231-32. the metropolitan museum 28. in addition to changing the charitable giving rules, congress addressed 212. see id. at 789. 2009] artist-museum partnership act 91 art community, and possibly including questions of the work's the only bargaining chip the museum has to retain both the displaying art work since vara's enactment in 1990, moral rights dominant form of giving, fractional gifts, has slowed dramatically. its endowment or its operating costs.98 is typically a formal process of removing a piece from both the donations with a different set of standards than the charitable significant infrastructure costs in the form of space and climate (2005), available at http://www.aam-us.org/museumresources/accred/upload/pl university may benefit from publishing critical editions of the as museums enter into relationships with artist donors, they may charitable organization under �170(b)(1)(a).140 fraction of the remaining undivided interest, again applying the relevant and appropriate pieces.90 market in which the museum community participates under the collections, which may include reimagining what uses of assurances of the work's physical integrity. all of these factors 103. 17 u.s.c. � 202 (2006) ("ownership of a copyright, or of any of the 35. elizabeth dillinger, comment, a not so starry night: the pension staggering, it is not necessarily liquid. indeed, cash and cash equivalents totaled 93. see, e.g., white, supra note 8, at 1042-43; gabor, supra note 2, at 1006. corrections and to allow the author to approve the version of a book that gets contribution in several significant ways. the work must have been a second consideration is the forms of giving that the act develop these older collections. under the proposed rules, however, it would promoting it on their websites."). cardozo arts & ent. l.j. 213, 218-19, 220 (1997). see also mary varson 59. id. at 102-03. 17. tax reform act of 1969, pub. l. no. 91-172, 83 stat. 487 (codified as donations. on charitable deductions � maintaining incentives for donating art to 34. rhodes, supra note 28, at 193. actually decreased moral rights protections, thus encouraging 2009] artist-museum partnership act 101 early in her career upon the publication of her first book, for which 219. supra note 28. effecting a paradigm shift in development strategies for collecting artists' interests in order to secure donations. one aspect of the thus potentially deducting the full value of the work, while 143. id. from the artist's point of view, the proposed rules may seem to supporters claim that it is in the public's interest to protect u.s.c.c.a.n. 1645, 1700. 169. id. thus, a painter could deduct the fair market value of a donated collectors of the 1950s and 1960s.87 thus alienating an individual aspect of the work and dividing her donated to qualified charitable organizations.13 . ."114 later years.7 the museum realized the planners, have tended to respond to these changing incentive 117. rigamonti, supra note 107, at 410-11. it also placed limits on recently, the debate has shifted. a general consensus has 104. id. � 106a(b). at http://www.mcachicago.org/exhibitions/interviews/ldlhpp.html. materials. a historical review of charitable giving in the united ultimately made many of the specific artistic choices. id. at 250. had the at 1969 u.s.c.c.a.n. 2391, 2408 (1969). investment in taking physical control of the work would eventually focus on whether it is ever ethical for a museum to sell art.93 these avenues are not identical to the ones foreclosed by the 1969 act. as will in the case that the donation fails any of the ppa's taught at a number of universities, including harvard university and the conditions, museums often engage in deaccessioning. deaccession problems, but in doing so implicates a number of contentious rules she would have been forced to donate the copyright to the requirements-- for example, if the donation is not completed upon requirement of a written instrument). incentives for charitable giving, many of these implications stem for deaccession. artist gifts necessarily come from living artists, charitable gifts would be brought in line with copyright principles the years of the donations. to the base costs to the artist.30 155. note, supra note 3, at 147. 170. this list is meant to invoke artists such as the plaintiff in scott v. dixon, misquotations: ulysses and genetic criticism, 2007 joyce stud. ann. 44 artistic incomes."189 furthermore, the resulting renaissance era and impressionist pieces. see toward a moral rights regime implemented by affirmative acquisition strategy for museums.48 are large enough to have what amounts to multiple collections. for example, copyright to the object are generally separate properties and contractual relationships that make up the sophisticated transaction the act, appraisals must take into account, among other factors, the these developments led congress to add dramatic restrictions to 16. see lozier, supra note 7, at 889-91 (discussing policy arguments in favor after winokur, museums were free to build long term transaction costs associated with this level of sophistication.191 in terms of "keep[ing] cherished art works in the united states and activity: donors cannot take a deduction unless a qualified how to address this issue as the tax reform act was being however, charitable giving is a bilateral proposed charitable donation with no special limitations.180 the reform act sought to remedy the incentive issue and reign museums may be forced to donor was able to circumvent the percentage limits on deductions, consequently, any museums institute ethics policies that favor the public77 created by the artist "no less than 18 months prior to [the] the form of these assets is important to the larger discussion. by far the largest 72. id. at 222 (quoting 2 john henry merryman & albert e. elsen, reappraised, with the subsequent deduction based on the new the deductions, claiming that the fact that the museum did not to complex fact patterns. visual artists will also have incentives to 4. douglas j. bell, note, changing i.r.c. � 170(e)(1)(a): for art's sake, 37 some work in order to keep museums operating.102 152. see supra notes 18-24 and accompanying text. 114. id. � 106a(a)(3)(a)-(b). short, this proposal creates an entirely new market of artist generally push vara's provisions out of the case law, which has importantly, this what the finished product would look like, this kind of collaboration could museum collection and its catalog.88 since 1969, artists have not been able to take a fair market value opportunity to negotiate additional terms, the ability to enforce contribution."138 in favor of tort109 "owned, maintained, and displayed by" qualified organizations and often, contribution will not be reduced under �170(e)(1), involving long term capital gains.136 the the irs challenged creating an economic benefit derived from charitable donations, work). incentives actually encourage. for example, fractional gifts have works to museums and libraries," framing the purpose of the act 58. id. at 102. in light of http://www.artic.edu/aic/collections/exhibitions/modernwing/overview (follow giving is on the decline.195 community. for example, the 2006 acquisitions list for the art 25. bell, supra note 4, at 542. response lead to further perverse incentives and dramatic to five years.33 alternatively, congress could establish art donation arbitration this was especially a concern when the collection that features work by living artists, but also a european modernist scenario attributable to the disadvantageous tax situation.163 benefited had he or she sold the piece on the open market.29 the goal of traditional fractional gifts, that is, to benefit of the long rights were originally excluded from copyright legislation in the the artist-museum partnership act proposes a solution to these this suggests that the act would significantly benefit a limited 166. congress has refrained from clearly defining the term "qualified museum when the license agreement expired.183 use); wagner, supra note 11, at 779-80 (describing the related use rule). the the classic illustration is the film collector who makes a donation of historical maintained by public and semi-public institutions. these institutions can be form of deaccession claim that it is inconsistent with the ideals of of chicago lays off 22 employees, chi. trib., june 20, 2009, at 11. then use a deduction from the donation of an early working draft to rubric.117 the new edition has sold well, resulting in significant royalties 92 depaul j. art, tech. & ip law [vol. xx:1 viable tool for helping the institution remain relevant.214 text. however, the senate committee on broadly, however, congress was concerned that the charitable 121. id. this "premature death" hypothetical could also result in what museum closures and budget cuts in the last year.100 museum at the time of the donation. such a development would be able to deduct the cost of paint and canvas, where a collector institutions. importantly, the collector-museum relationship teaching, would have relatively high adjusted artistic gross of the work, imposing specific requirements beyond a mere recital finally, while this article focuses on artists and museums, there the new style of fractional gift suggested above does not treatment for the donation of these same works. with further photographic image produced for exhibition purposes only,"112 the case with artist donations.24 bargaining position. this would reduce some of the costs of these bad incentives were of charitable transactions and would become an element in the two different institutions, while benefiting from her possessory the art institute of chicago's new modern wing houses a contemporary art category responded immediately. the new york metropolitan and moral rights vested in the author of the would achieve the goals of the act without putting artists and art's stature, and even elite artists could produce work that does makes any particular donation less appealing at the outset and collectors would still be required to transfer entire interests in a donated object. consequently, donations are the life-blood of museums, 193. not fall under the vara framework.206 5. note, supra note 3, at 147-48. includes income generated from teaching or lecturing about art, as deduction for charitable donations of their own work, a situation 142. id. under fraudulent circumstances in 1978.). he then and has begun to put her estate in order. even under the pre-1969 this practice is widely accepted as appropriate.97 other types of artistic works, such as the library of congress. imposed by those affirmative duties. large. the american association of museums accreditation 206. see scott v. dixon, 309 f. supp. 2d 395, 400 (e.d.n.y. 2004). controversy,99 67. gabor, supra note 2, at 1007-08. conservation, or the public presentation" of the work.116 made a high-profile donation of the original galley proofs of the contractual duties related to moral rights, museums can rely on the appreciable property attached to that creation, such as working this suggests that the object and its interests. recall that part of the appraisal process under the problems than others. generally, deaccession is a tool with which 171. elite and academic artists often overlap, especially in the literary arts. selling, their work under the proposed rules. interests. artists would have to educate themselves on this new the reappraisal system has been replaced with a single courts have read vara narrowly and have imposed limits on states as it applies to art will supply a necessary anchor for the 179. supra note 35 and accompanying text. (a fractional gift is a gift of the available at http://www.aam-us.org/museumresources/accred/upload/ethics%20 congress). museums, 47 ohio st. l.j. 773, 773 (1986). cutting measures in june of 2009, including a salary reduction for the museum isitions.pdf. 207. see rigamonti, supra note 107, at 410. incomes on which to apply the deduction.171 extreme, newer minor or redundant pieces may be favored over older pieces that none of these bills were 213. see id. at 802-04. appreciated value of certain kinds of tangible property as income.19 subsection (a) also makes it clear that the the amount by which a taxpayer may reduce his or her gross well as other educational institutions that may have an interest in collecting additionally, there are costs to these benefits. first, the act puts donation. finally, it concludes with practical suggestions through university of chicago. les prix nobel: the nobel prizes 2003 (tore manuscripts to the library of congress after the tax reform act "public trust" is related to the idea of the "charitable trust", a trust "created to income" as that part of the artists adjusted gross income from "the more likely have to form similar relationships with artists in order to develop its of charitable giving reform generally). regimes that protected an artist's the senator recalled the appraisal scandals that in scattered sections of 26 u.s.c. & 29 u.s.c.). with which to facilitate building relationships with museums. the acquisition budgets cannot compete in this inflated art market.84 created the "related use rule" requiring that the charitable donee in new york state during the 1970s.69 for example, j. m. coetzee, recipient of the 2003 nobel prize in literature, has 198. see dillinger, supra note 35, at 1068 ("in the past, some museums and not laureates/2003/coetzee-bio.html. in order to achieve the partnership espoused in the title of the act, 112. 17 u.s.c. � 101 (2006). such as literature or music. note, however, that the bill does not limit itself to while vara's protections have been in studying her work will have access to these important indications be rewarded with complete ownership interests in the piece. time. developments in tax theory and concerns over abuses led to maine, giving intellectual property, 39 u.c. davis l. rev. 1721, 1727 (2006) could deduct the fair market value of the piece. thus, after 1969, shown that institutions are more willing now than ever before to these fractional-giving relationships ("[the winokur method] allowed the donor to custom tailor his donations along 4. impact related use rule came out of a compromise in conference committee reflecting ppa of 2006). a similar drop in have a right to have their name associated with their work, to not the creation.199 see geoff edgers & peter schworm, brandeis to sell school's art collection, help fund a sabbatical, or she could time the donation of the limit the total amount of an artist's deduction. subsection (c) sets income through the use of deductions of charitable donations.32 consider their collections as assets and to view deaccession as a subject to the "related use rule" governed by the donee's 501(c)(3) subsection (e) of the new paragraph excludes work-for-hire other limitations developed during this period. donation. that vara protects only a limited class of works and artists, and acquisitions in the united states, and fully ninety percent of all editions). other developments in the art community have had 12. see note, supra note 3, at 150-52. see also william a. drennan, act. two subsets of artists immediately come to mind. elite typical restrictions, already common in the museum community. inviolate cultural repositories and contend nothing should ever be removed . . . vara claim. an artist's stature is not dispositive of a work of profile examples of this form of government intervention occurred 129. id. at 2080-81. will substantially benefit.188 boston globe, jan. 26, 2009 available at http://www.boston.com/ae/theater_arts donating the copyright at the end of the licensing agreement. in an impact on the treatment of art objects, including a long-running 2. vara and the new moral rights regime compromises that ultimately benefit artists, museums, and, most 165. s. 405, 111th cong. � 2(a) (2009). for its part, the museum community has established best on some of the issues the art community is currently faced with including donors already committed to contributions, and one institution, the id. in other words, while the total endowment of the art institute may be modern museums are typically incorporated as non-profits as has been discussed, the current rules require that accompanying text. this encompasses the traditional visual arts museum as 135. id. donating their work to museums, potentially driving contemporary subsection (d) defines "artistic adjusted gross artists and museums will have to work closely together while charitable deduction. wieczorek, supra note 14, at 95. to be clear, these obligations would for the most part be nothing 200. see note, supra note 3, at 147. 66. see wagner, supra note 11, at 773. see also goldstein, supra note 65, at could, subject to valuation of his or her work, deduct the same the donor's death-- regardless of the remaining value of the piece, in fact, some commentators have commenced. even some limitation to the artist's ability to additionally, works of "recognized stature" have been artists, and if those works come with restrictions on deaccession, then the dates back to the tax reform act of 1969.185 protection act, even these donations have dropped off, support behind philanthropic endeavors in 1917, it did so by under the proposed crisis for collecting institutions. foundational collection of the museum of contemporary art, they attempt to remain viable. one of these challenges is the rise potential deduction is high and the museum may be in a weak however, completeness will generally be a. charitable giving in the united states and ultimately add more value to the novelist's donations if she were to donate importantly, the public. these compromises are perhaps best 193. under the ppa, that possession must be actual and physical. 78. am. ass'n of museums, accreditation commission's would be available. the hypothetical painter could probably take the same issues and could have a dramatic impact on the way in which moral rights are different in this respect. of the particular artist,205 deductions exceeding this amount were subject to carryover for up 89. see gabor, supra note 2, at 1016-19. drops in artist gifts were not limited to the visual arts. the artist-museum appreciated value of the donation was derived from the fact that question consider the tax implications of donating, rather than 154. id. 10. the artist-museum partnership act, s. 405, 111th cong. (2009). 176. galleys are a printing of the final draft of a book before it gets printed rules would be influenced by the market success of the novelist, 38. wieczorek, supra note 14, at 97. eliminated by treating an artist's work as ordinary income property that `the sales were provident, prudent and reasonable,'"72 the artist-museum partnership act possibility is that a museum may use the proceeds to supplement further, the donor must donate his or situation created by the tax reform act.126 license agreement to maximize the benefit of her deductions by developed that deaccession can be done ethically, but the new donate aspects of the same creation to different donees would be 2009] artist-museum partnership act 111 new act. under the act, the fair market value of any donation is of his undivided interest in a collection of paintings to a local act. congress passed the 1969 tax reform act to counteract consequences. historically, this was the case with the tax reform the committee reports of both the house "collections" hyperlink). obviously, the art institute would continue to the fair market value of her donation to the library of congress in those 11 years after the tax 6. bell, supra note 4, at 548-549. dship%20ace%20(2005).pdf. subcommitte on estate and gift taxation, senate committee on finance, 97th 64. see i.r.c. � 501(c)(3) (2006) (exempting educational organizations from moral rights regime. if congress were to amend vara at the the charitable donation regime. the passage of vara and the rise treatment of appreciated property). was not present on site for most of the process and issued his directions by e- both are separate from the art institute's other collections, including and thus would presumably be relatively newer works. under an the overvaluation issue by creating the irs art advisory panel, a group of "prejudicial to his or her honor or reputation."113 own undivided interest, chose not to display the paintings, and in perceiving fractional giving to be an unfair tax loophole, congress the united states government has a long history of supporting 127. 155 cong.rec. 2081 (2009) (statement of senator leahy). 150. for example, when congress came to view fractional giving as a 116 depaul j. art, tech. & ip law [vol. xx:1 donated objects, came to the attention of members of the senate.52 government, in fact, is almost the sole contributor to the from the copyright. additionally, there may be other collectable, for donations.21 during their tenure in office, such as when president nixon took a relationships with the artists represented in their collections. progress.12 she was able to retain the copyright. now she earns a comfortable advocating for agreements that would limit the artist's discretion in 104 depaul j. art, tech. & ip law [vol. xx:1 with fewer charitable donations coming in, many museums could 100. one of the most significant is the rose museum at brandeis university. 208. see, e.g., rigamonti, supra note 107, at 411. and then donating the copyright to the for example, it that the valuation concerns espoused in that act and in other winokur, the ppa requires that donee organizations take physical what has changed in this hypothetical paradigm is that the contractual obligations would only accelerate as more artists enter 39. winokur v. commissioner, 90 t.c. 733 (1988). place risks the same sort of backlash. authors of works of visual art, alienable.172 an open question. the same can be said of other elements of a 90. see goldstein, supra note 65, at 227. "achieved some level of local notoriety," but was lacking in renown. 309 f. no widespread donation by living artists of their own work, a her entire interest in the work within that timeframe.55 "wasteful."73 2006). selling property.23 charitable-deduction regime.26 roughly the past hundred years. for a little over half that time, deduction.173 debate on deaccession policies8 particularly in the wake of several high-profile museum": appropriate donor incentives for fractional gifts of art, 83 notre and toward selling their work on the private market.155 museums would have to be proactive about in terms of artist giving, the inequitable tax standing compared perhaps their principles, to compete in this new market. the result deduction has been praised for encouraging pluralism . . . [and] grants citizens decisions. faced with the choice to make a potentially expensive 33. wieczorek, supra note 14, at 93. 2009] artist-museum partnership act 107 now, many of those donations would come with restrictions. be forced into this new market.197 particularly the practice of deaccession, and moral rights will fair market value of works of art worth a significant portion of 136. id. rules" such as "providing relevant information as to the value of novelist hypothetical, the university might argue that it would be more efficient property, 44 tax law. 885, 895 (1991) (quoting statistics about the drop in donated object while the museum gains the benefit of the object us.org/museumresources/accred/upload/mission%20ace%20(2005).pdf ("a including donations from collectors. conf. rep. 91-782, at 17 (1969), reprinted ."). experts that review appraisals of charitable donations of art. jessica l. furey, considered. the house committee on ways and means deduction in both years.40 copyrights, but should insist on the eventual donation of both. inalienable rights may be waived. compare id. at 376-77 (the civil law ("the reform act") was a cong., 1st sess. 316 (1981) (testimony of daniel j. boorstin, librarian of status, and the intent of the donee to put the work to a "related use" vara also contains exceptions for modifications "resulting from while subsection (f) makes clear that the object and the while this ability to claim a deduction based on a creation and the object subject to the donation.20 the reality of the situation may be more complicated. for one resources act of 1986). investments,82 pieces,145 146. s. 405, 111th cong. � 2(a) (2009). sometimes displaying the pieces in their offices and 132. id. law, ethics, and the visual arts 721 (2d ed. 1987). asset category is investments totaling approximately $828 million. id. at 45. development of fractional giving fostered what congress thought changes in the tax code, most recently the passage of the pension led to the original changes in the tax code and pointed to "new the gift, providing appraisals by qualified appraisers, and, in some passed and instead sold his works to a private foundation.158 unlikely to be determined beforehand and would be subject to difficult to evaluate and are largely unregulated by the display the collection for a portion of the year corresponding to its charitable giving to museums after a change in the alternative minimum tax 56. id. at 100-01. ownership and copyright ownership, in order to receive a the ability to make actual multiple donations. recall that charitable donations of intellectual property: the case for retaining the fair proposed rules would take into account the extent to which the indication that courts prefer contractual solutions to moral rights who "made her living as a professional artist and sculptor" and had even congress felt this scenario undermined the charitable motivation thus, from the point remove the work from its catalog, freeing up space to acquire more (2007). 49. follas, supra note 36, at 1791-93. see also wieczorek, supra note 14, at discrepancy in benefits between ordinary artists and elite artists, policy of supporting the public trust and of the museum's unique the license agreement, the museum enters into a contractual substantially lowers museums' bargaining power once negotiations heightened scrutiny, 36 ucla l. rev. 1005, 1007-08 (1989) (establishing the this public-private situation is embraced in tangible ways by both itself. various incarnations of this scheme have existed over controversial in the past.217 benefit . . . the general public rather than a private individual or entity." novelty of artist donations is that while museums have been while this regime value. starker in the manuscript division, where in the same period the in that case there written instrument, and remain in effect for the life of the artist.115 incentivize artists selling their work to collectors in favor of this interest it is sometimes necessary to responsibly deaccession 140. s. 405, 111th cong. � 2(a) (2009). be donated to a more appropriate institution or, in the case of museum in two equal installments over two tax years, taking a have the same benefits for museums as the traditional style. under the diminution of other development streams. museums have not limiting moral rights protection to works falling within vara's burden through deductions, begins to resemble the so-called tax 19. see note, supra note 3, at 147. commission's expectations regarding institutional planning 1-3 85. follas, supra note 36, at 1781. the most valuable of these donations reform act went into effect, however, the music division 153. bell, supra note 4, at 539. . from teaching, lecturing, performing, or similar activity with the public good 107 (1987)) (internal quotes omitted). 188. supra notes 165-69 and accompanying text. the estate tax defines the work itself is not donated twice; rather, rights to possession of boards. the idea of such a body would be to facilitate responsible charitable giving dating back to the revenue act of 1917.11 of death, while the 2006 act defines the same goods subject to a 32. drennan, supra note 12, at 1062. donors are already incorporated into museum best practices.209 82. gabor, supra note 2, at 1009-10. embarked on deaccession programs with little initial public the pension protection act of 2006 ("ppa").49 scrutiny.70 image galleries, but that does not mean that the artist has the must take into account the artist's market performance by storage and handling standards, and restricts the museum from the donee must qualify as a has been called "the mismatch problem."60 receive a fair market deduction.181 according to testimony 182. commercial image agencies are increasingly important players in the "deaccession" refers to the formal removal of a piece from a collection. see represent further portions of undivided interests in the creation. realizing ordinary income, that is, the deduction would be limited its grant of rights. potential conflicts with other laws have led the tax code resulted in unintended incentives, such as when the 184. see supra note 46 and accompanying text. copyright will also go to the university. the novelist would then be faced with 79. see id.; see also am. ass'n of museums, accreditation 199. see supra note 172-74 and accompanying text. 75. am. ass'n of museums, accreditation commission's 164. see 155 cong.rec. 2081 (2009) (statement of senator leahy). 194. see supra part iv.a.i. held that it was the right itself that controlled the status of the senator bob bennett, co-sponsor of the act, made his 2009] artist-museum partnership act 119 2009] artist-museum partnership act 95 artists may elect to advocate for specific terms related to their agreement between the hypothetical painter and a museum. the

Paint a New Picture

The Artist-Museum Partnership Act and the Opening of New Markets for Charitable Giving