To amend the Internal Revenue Code of 1986 to exclude from the gross estate the value of certain works of artistic property created by the decedent.

January 7, 2003

Mr. NADLER introduced the following bill; which was referred to the Committee on Ways and Means

To amend the Internal Revenue Code of 1986 to exclude from the gross estate the value of certain works of artistic property created by the decedent.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Artists' Estate Tax Fairness Act'.

SEC. 2. EXCLUSION FROM GROSS ESTATE OF VALUE OF CERTAIN WORKS OF ARTISTIC PROPERTY CREATED BY DECEDENT.

(a) IN GENERAL- Section 2031 of the Internal Revenue Code of 1986 (relating to definition of gross estate) is amended by striking subsection (d) and inserting after subsection (c) the following:

`(d) WORKS OF ARTISTIC PROPERTY CREATED BY THE DECEDENT-

`(1) IN GENERAL- If the executor makes the election described in paragraph (4), there shall be excluded from the gross estate the value of each qualified work of artistic property held by the decedent at the time of his death if, by his personal efforts, the decedent created such qualified work of artistic property.

`(2) APPLICATION- Paragraph (1) shall not apply unless the decedent held at the time of his death not less than 50 of such qualified works of artistic property.

`(3) QUALIFIED WORK OF ARTISTIC PROPERTY- For purposes of paragraph (1), the term `qualified work of artistic property' means a--

`(A) painting,

`(B) drawing,

`(C) sculpture,

`(D) sculpture that is in multiple cast, carved, or fabricated of 200 or fewer that are consecutively numbered by the decedent and bear the signature or other existing mark of the decedent,

`(E) monoprint or monotype that is a unique print or a print pulled in an edition of 1: a single impression,

`(F) print that is in a limited edition of not more than 200 copies that are signed and consecutively numbered by the decedent, or

`(G) a still photographic image produced for exhibition purposes only, existing in a single copy that is signed by the decedent, or in a limited edition of 200 copies or fewer that are signed and consecutively numbered by the decedent.

`(4) ELECTION- The election under this subsection shall be made on or before the due date (including extensions) for filing the return of tax imposed by section 2001 and shall be made on such return.

`(e) CROSS REFERENCES-

(b) INCOME IN RESPECT OF DECEDENTS- Subsection (a) of section 691 of such Code (relating to inclusion in gross income of recipients of income in respect of decedents) is amended by adding at the end the following new paragraph:

`(6) CERTAIN WORKS OF ARTISTIC PROPERTY- For purposes of paragraphs (1), (2), and (3), a work of artistic property whose value was excluded from the gross estate of a decedent under section 2031(d) shall be treated as a right to receive an item of income in respect of a decedent.'.

(c) CARRYOVER BASIS-

(1) IN GENERAL- Subsection (a) of section 1014 of such Code (relating to general rule for basis of property acquired from a decedent) is amended by striking `or' at the end of paragraph (3), by striking the period at the end of paragraph (4) and inserting `, or', and by adding at the end the following new paragraph:

`(5) in the case of a work of artistic property treated as a right to receive an item of income in respect of the decedent under section 691(a)(6), the basis in the hands of the decedent.'.

(2) CONFORMING AMENDMENT- Subsection (c) of section 1014 of such Code (relating to property representing income in respect of a decedent) is amended by striking `This' and inserting `Except as provided by subsection (a)(5), this.'.

(d) EFFECTIVE DATE- The amendments made by this section shall apply to decedents dying after the date of the enactment of this Act.

END