Advocacy
CAA Takes Stand on Noncash Charitable Contributions
CAA has joined eighty national, regional, state, and local museums, educational and social-service groups, and other membership organizations to cosign a letter responding to Senator Charles E. Grassley (R-IA) and the Senate Finance Committee’s increased interest in reforming regulation and oversight of nonprofit organizations, including changing how taxpayers take deductions for donations of noncash gifts to museums and other nonprofits.A recent report by Congress’s Joint Committee on Taxation suggests eliminating or significantly modifying deductions for noncash charitable contributions such as art, collectibles, real estate, and household goods. The proposed changes are an effort to reduce the potential of valuation misstatements by taxpayers. One of the leading proposals would limit a donor’s deduction to cost-basis only (e.g., the initial amount a person paid for a work of art, not its current value). Currently, taxpayers may take a charitable deduction for the fair market value of noncash gifts. Congress enacted a version of the cost-basis deduction in the Tax Reform Act of 1986, which was not repealed until 1993.
On June 21, the Panel on the Nonprofit Sector, an independent group of leaders from various public charities and private foundations, released to Congress its second and final report, which recommends more than 120 actions to be taken by charitable organizations, by Congress, and by the Internal Revenue Service to strengthen the nonprofit sector’s transparency, governance, and accountability.
The letter that CAA cosigned supports the panel’s reports as a whole but cautions against limiting donor deductions to cost-basis only. The full text is available at www.collegeart.org/taxletter.