Changes to the Pension Protection Act? We Are Still Waiting

Over a year ago I posted on the AW Blog about possible changes in the Pension Protection Act. Sen Chuck Schumer of NY and Sen Charles Grassly of Iowa were looking to repeal or change the way charitable donations are calculated, specifically with regard to fractional gifting over time. For perspective and past background click HERE to read the previous post. Progress appears to be made, but as the changes are not necessarily considered a priority in todays economy, and are more along the lines of a correction, the wheels of government move very slowly.

Shelly Banjo of the Wall Street Journal just reported that Sen Schumer is proposing changes to fractional gifting to museums by changing the donation period from 10 to 20 years, to allow for some form of appreciation, the museum would have to report to the IRS on an annual basis, exhibit the art at least once every 5 years and donations of over $1 million to be reviewed by the IRS Art Advisory Panel. It appears the annual valuation process and potential for a decrease in value still remains, but is marginalized by the extended donation time frame.

Banjo states Restrictions in the act prevented donors from realizing tax benefits on the appreciation of the art's value and limited the time allotted to complete the donation to 10 years.

Wealth advisers and estate lawyers soon stopped recommending the practice and "these gifts virtually dried up," said Michael Conforti, president of the Association of Art Museum Directors.

Now Sen. Schumer hopes to "restore the incentive for collectors to share these works of art with the public," he said.

Banjo continues "This bill remedies some of the problems with respect to the current law, but it doesn't go far enough," said Neil Kawashima, a partner with McDermott Will & Emery LLP in Chicago who represents wealthy families with respect to estate and gift planning.

Sen. Charles Grassley, an Iowa Republican who spearheaded the initial changes, said the proposed bill is already a compromise.

"Some museum officials thought Congress went too far to shut down abuse. I agreed to look at a compromise that would preserve accountability from donors and museums to taxpayers," Sen. Grassley said. "I still think partial donations of art are of questionable value to taxpayers, but museum officials and their champions feel strongly otherwise, so I'm willing to continue to listen."

To read the full WSJ article, click HERE.