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Regulators Must Decide When a Donation Is a Dodge

| Aug 24, 2017 | Uncategorized |

Large donations to museums resulting in a tax break, often draw a watchful eye from regulators.

A story was reported recently in The New York Times about a donation to a museum in Canada that has drawn some criticism from the country’s regulators in “Canada Debates Whether Gift of Leibovitz Photos Is Also a Tax Dodge.”

A wealthy Canadian purchased approximately 2,000 prints from portrait photographer Annie Leibovitz for $4.75 million in 2012 and donated them to a museum in Nova Scotia. The idea was that the wealthy donor would then be able to get a tax break in Canada.

The problem is that the museum is trying to get a tax break of $20 million for the wealthy donor.

Three different independent auditors have supported that the pictures would be worth $20 million, if they were sold individually.

This has been difficult for regulators to swallow, since the donor would be receiving a break far greater than the amount that he actually spent.

Regulators have rejected the application for the break three different times, but the museum is attempting a fourth application.

The laws are different in the U.S. However, large donations will be carefully studied by tax officials.

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