Tax Incentives for Giving Gifts of Art: The Pension Protection Act of 2006 and Tax Reform Act of 1986

This paper analyzes the importance of tax incentives to art museum donors to give gifts of physical works of art to museums. It shows the importance and effectiveness of tax incentives both as motivation for donors to give and also for the financial health and sustainability of art museums. This project also examins the Tax Reform Act of 1986 (100 Stat. 2085, 26 U. S. C. A. 47, 1042) and its effect on the state of charitable giving to museums during the years 1986-1993. The author then used this experience to evaluate the possible impact of the government again curtailing tax incentives to donors with the Pension Protection Act of 2006. This paper also examins the more recent technical corrections passed by Congress and the proposed Promotion of Artistic Giving Act, and speculates on the effects of these recent acts on museums.