Art has often been viewed as a good investment opportunity by many investors. “In recent years, many wealthy individuals have sought to convert their personal art collections into private museums as a way of reducing taxes while retaining control of the property.” Tax experts and lawmakers have been placing an increasing amount of scrutiny on the tax-exempt status of many of the private museums in existence. The Internal Revenue Service (IRS) guidelines dealing with the amount of public benefit that is sufficient to achieve preferable tax treatment is very vague. Because of how vague the standards are it is important for people to focus on the “details of operation” that establish the museum’s sufficient public benefit. “At the end of the year, your client can easily report the accomplishments on the entity’s annual information return (Form 990PF) as a statement of the entity’s work to achieve its public benefit.”
See Avery B. Armas and Jennifer M. Pagnillo, Private Museums Under Scrutiny, Wealth Management, February 11, 2016.
Special thanks to Jim Hillhouse for bringing this article to my attention.
