IRS Rules in Private Letter That Art Donations Are Not Self-Dealing

In a recent letter the Service ruled that loans of arts to a private foundation and museum by two individuals that are disqualified persons will not constitute self-dealing for purposes of Section 4941(d)(2)(C) because the storage of the individuals’ personally owned works of art is considered “furnished without charge” within the meaning of Treas. Reg. section 53,4941(d)-2(d)(3).

The Service ruled that any benefits the two individuals received from the storage of their personal art will be merely incidental to assisting the foundation achieve its section 501(c)(3) purposes— the exhibition of art for educational and scholarly purposes. The Service further held that even if the foundation pays for transportation, insurance, or maintenance costs it incurs in obtaining or using the property, such property will still be considered furnished without charge, so long as the payments are not made directly or indirectly to the disqualified person.

See PLR 201423032: Art Donations Not Self-Dealing

Posted by Theodore H. Waggner, Esq., Associate Editor, Wealth Strategies Journal