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.

BREAKING DOWN '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.


  1. Gift

    Property, money or assets that one person transfers to another ...
  2. Gift In Trust

    An indirect bequest of assets to a beneficiary by means of a ...
  3. Fractional Share

    A share of equity that is less than one full share. Fractional ...
  4. Gift Of Equity

    The sale of a home made to a family member or someone with whom ...
  5. Charitable Contributions Deduction

    One of the itemized deductions available for taxpayers who donate ...
  6. Pooled Income Fund

    A type of mutual fund comprised of gifts that are pooled and ...
Related Articles
  1. Taxes

    What Are Gift Taxes?

    If you're not sure what gift taxes are, read on and we'll explain.
  2. Taxes

    Fund a Lifetime of Giving with Donor Advised Funds

    Donor advised funds can have tremendous tax, cost and administrative benefits.
  3. Insurance

    Using Life Insurance To Make Charitable Donations

    Your life insurance policy can be a great tool for charitable giving. Find out how.
  4. Insights

    Gift-Giving Etiquette

    Here's a look at how much you should spend and what you should give this holiday season.
  5. Taxes

    3 Ways to Minimize Your Taxable Gains By Giving

    Consider these three ways to minimize taxable gains via charitable contributions.
  6. Taxes

    Donor Advised Funds: Tax Efficient Giving

    Donor advised funds are a tax efficient way to donate large sums to charitable organizations.
  7. Financial Advisor

    How to Gift Your Way to Lower Estate Taxes

    Estate planning is not just for inheritance. High net-worth individuals, who plan properly, can gift their money and save on taxes.
  8. Personal Finance

    How To Get Gift Cards At A Discount

    Use these tips whether you're buying someone a gift or just want to score a discount at your favorite stores.
  9. Insights

    Why Retailers Love Gift Cards

    Gift cards have many benefits for retailers compared to cash sales. We'll look at a few of them.
  10. Taxes

    Keep Gifts Simple and Meaningful This Season

    Sometimes simple gift ideas are the best.
Hot Definitions
  1. Standard Deviation

    A measure of the dispersion of a set of data from its mean, calculated as the square root of the variance. The more spread ...
  2. Entrepreneur

    An Entrepreneur is an individual who founds and runs a small business and assumes all the risk and reward of the venture. ...
  3. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
  4. Perfect Competition

    Pure or perfect competition is a theoretical market structure in which a number of criteria such as perfect information and ...
  5. Compound Interest

    Compound Interest is interest calculated on the initial principal and also on the accumulated interest of previous periods ...
  6. Income Statement

    A financial statement that measures a company's financial performance over a specific accounting period. Financial performance ...
Trading Center