Fractional Gift

AAA

DEFINITION of 'Fractional Gift'

A gift that provides a fractional interest in an artwork today, while providing the rest of the interest over a period of time. A fractional gift may allow the donor to still display the work at a non-museum location for a period of time, possibly by alternating time periods with its display at the museum.

INVESTOPEDIA EXPLAINS 'Fractional Gift'

A fractional gift may be given by a donor who wants to ultimately provide a piece of art to a museum, but who is not ready to fully part with the item presently. The donor will still be able to enjoy a charitable income tax deduction, though the percentage deduction is open to more stringent regulations. Because the Internal Revenue Service discourages fractional gifts, the donor is able to take the less of two values when deducting: 1) an amount based off of the work’s value when the installments began, or 2) the fair market value at a subsequent installment. This means that the donor doesn’t get a larger deduction if the work appreciates in value, and doesn’t get the original value if the work depreciates in value.

Fractional gifts are most likely to be used by donors who are less concerned with obtaining tax deductions from the donation.

 

RELATED TERMS
  1. Gallerist

    The owner or operator of an art gallery. Gallerists buy and sell ...
  2. Chandelier Bid

    A bid that is announced by an auctioneer during an auction that ...
  3. Lyon & Turnbull

    An auction house established in Edinburgh, Scotland, in 1826. ...
  4. Phillips

    A New York-based auction house specializing in the sale of art ...
  5. Original Print

    A work of art that is created using a master image carved into ...
  6. Proof

    An impression of a print made before an edition to check the ...
Related Articles
  1. Personal Finance

    5 Expensive Pieces Of Memorabilia You Can Buy

    These movie and TV props are some of the coolest, and most expensive, you can buy.
  2. Personal Finance

    5 Most Expensive Paintings Ever Sold

    These are the most expensive paintings ever.
  3. Personal Finance

    The Most Expensive Bottles Of Alcohol

    Here's a rundown of the most expensive bottles of wine, scotch and beer.
  4. Retirement

    5 Investments You Can't Hold In An IRA/Qualified Plan

    The list of prohibited investment vehicles is short, but it's important to know what is off limits.
  5. Investing

    Five Alternative Investments For Main Street

    FOX Business Network anchor Deirdre Bolton explains the alternative investments investors ask her about the most.
  6. Investing Basics

    Fine Art Can Be A Fine Investment

    The art market is fickle, and there are no guarantees of profitability, but with a little legwork and forethought you can fill your home with images that may prove worthy investments down the ...
  7. Options & Futures

    Investing In Fine Wine

    If you fail to uncork profits in this market, you can always toast your loss.
  8. Savings

    How To Cash In Your Heirlooms

    Learn how to make the most money from your family treasures without getting ripped off.
  9. Personal Finance

    Why Are People Hoarding Coins?

    Meet the new class of investor: the coin hoarder.
  10. Personal Finance

    Should You Pawn Your Valuables?

    Pawnshops provide easy access to short-term loans, but they aren't the only option.

You May Also Like

Hot Definitions
  1. Mixed Economic System

    An economic system that features characteristics of both capitalism and socialism.
  2. Net Worth

    The amount by which assets exceed liabilities. Net worth is a concept applicable to individuals and businesses as a key measure ...
  3. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit ...
  4. Covered Call

    An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset ...
  5. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
  6. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
Trading Center