Bill Russell grew up on the Great Plains. During his youth, he was a rodeo bull rider and gained fame as "Wild Bill" for his daring exploits. Wild Bill was an artist at heart and soon decided to move on to his artistic pursuits. He traveled throughout America and Europe studying all of the great modern and classical artists. In France, he was greatly impressed by the delicate works of Impressionist painters Monet and Manet and the bold colors and brush strokes of Van Gogh. Upon his return to his beloved great plains of the west, Wild Bill combined the subtlety of the Impressionists, the colors of Van Gogh and his own unique skills. His Impressionist western landscapes and paintings of cowboys and life on the ranch became treasured by art collectors nationwide.

Wild Bill was approached by the Cowboy Western Museum and asked to donate one of his paintings. The museum director noted that they did not have any western Impressionist art and a Wild Bill Russell painting would draw art lovers from America and the world. Bill was now finally selling his paintings for $75,000 or more, and now had another new experience - paying large income taxes. He asked, "Could I get a charitable deduction for this gift of my painting?"

Under current law, Wild Bill Russell will not solve his tax problem with a gift of art. Proposals exist to permit a fair market value deduction for gifts of art created by the artist, but have not yet passed.

When Wild Bill creates a work of art, that property is considered work created in "the ordinary course of trade or business." Therefore, his artwork would be deemed ordinary income property. Reg. 1.170A-4(b)(1). If an ordinary income asset is donated to charity, there is a deduction only for the artist's cost basis. Sec. 170(e)(1).

As a result, Wild Bill will receive a deduction only for the cost of the painting -- his canvas and paints. Nevertheless, since Wild Bill wanted to help the Cowboy Western Museum, he decided to make the gift. But Wild Bill also wrote his Montana Senator and suggested that the law should be changed to permit a fair market value deduction for gifts of art.

At the Cowboy Western Museum, Wild Bill's painting "The Lonesome Cowboy" caused a sensation. Art lovers from everywhere flocked to view the solitary cowboy on a soft Impressionist landscape. Wild Bill did not receive a large deduction, but had the satisfaction of lifting soul and spirit for thousands of art enthusiasts.