Fractional Gifts of ArtFractional Gifts of Art

In last month’s issue, we wrote about the related use test for getting full fair market value (FMV) deductions for appreciated artworks; the no-second chance for complying with the many appraisal and substantiation rules; and the Internal Revenue Service Commissioner’s Art Advisory Panel.¹

In this follow-up, we’ll discuss the treacherous rules governing fractional gifts of art and the severe penalties for not giving all the interest by the end of 10 years.

You’ll also learn about transferring an appreciated artwork to a charitable remainder trust (CRT). That can be a substitute for a no-longer available tax-free Internal Revenue Code Section 1031 exchange. This technique avoids or reduces dreaded capital gains taxes.

The Situation

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