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.
Reference: New York Times (July 25, 2017) "Canada Debates Whether Gift of Leibovitz Photos Is Also a Tax Dodge."