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Senate Examining Private Museums for Abuse of Tax-Exempt Status

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Senator Orrin G. Hatch and the Senate Finance committee have launched an investigation into museums that have recently been opened by private collectors, such as the Broad Museum in Los Angeles, seeking to re-examine their tax-exempt status. According to The New York Times, Hatch wants to revisit the benefits provided to these institutions, which often provide valuable architectural commissions, to see if they warrant what amounts to "government subsidy." The investigation came about, in part, after an earlier Times article questioned if private museums are truly fulfilling the educational mission and public benefit required by the tax code, and if the value provided by large tax breaks is balanced by an equally beneficial good to the public at large.

This move towards smaller, private collections comes amid the backdrop of a red-hot art market, where the sheer value of collecting makes it an attractive investment (all the more so if, by obtaining non-profit status, these collections-turned-museums can then become sources of significant tax deductions). A spokesman for the Senate Finance Committee noted the investigation is only looking at a recent trend towards smaller, private museums, often in out-of-the-way locations (such as the Glenstone, which is nearly adjacent to the owner's property) and not at museums or similar non-profits as a whole.

· LA's Broad Museum: A Downtown Destination Fit for the Instagram Age [Curbed]