Tax deductions for donations of art to museums is not the biggest issue in budget reconciliation, but it may spark one of the liveliest personal battles between Senate and House members when they meet to write a compromise bill.

One one side is Sen. Daniel Patrick Moynihan (D-N.Y.), a champion of rolling back tight limitations passed in 1986. On the other side is House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.), who is determined to keep things the way they are.

Squeezed in the center are dozens of museums and the wealthy patrons who donate major artworks and manuscripts.

The issue is a 1986 tax amendment that limited the ability of individuals to take deductions for the appreciated value of donated art works -- that is, the amount that the work increased in value between the time it was purchased and the time it was donated. In general, the limitation affects only the wealthy because it applies only to the alternative minimum tax, paid by taxpayers with so many deductions that their tax rate would fall below 21 percent.

For purposes of the alternative minimum tax, a donation of an artwork is limited to the original purchase price.

For instance, suppose several years ago, someone bought a painting by an obscure artist for $1,000. Today, the artist is celebrated and the value of the painting has risen to $50,000. If the owner donates the painting to a museum, he can deduct the full $50,000 only if the owner is not subject to the alternative minimum tax. Otherwise, the deduction is limited to $1,000.

As a rule, anyone that generous is probably paying the alternative minimum tax.

Joseph Gale, Moynihan's chief counsel, said the 1986 act has eroded donations to museums. He said one study shows major donations down 42 percent.

However, other 1986 restrictions on donations for charitable giving have had little effect, indicating that Americans in general have continued giving, but the wealthy either are giving less or have switched their charitable donations to areas other than art.

"Charitable giving in general has not suffered as much as the dire predictions," Gale said. "But {donations of} anything that appreciates in value over time has really fallen off."

The 1986 restrictions on appreciated property also applied to stocks, but Moynihan's bill would apply only to paintings, rare manuscripts and other works of art.

Gale said the amendment is necessary "if you're going to keep that piece of the culture thriving." He said Moynihan, likely to be a member of the House-Senate conference committee that writes the budget reconciliation bill, will fight for the amendment.

Sitting across the table from Moynihan, however, will be an 800-pound gorilla, Rostenkowski. And his staff made it clear he will oppose it.

"No {expletive deleted} way," said an aide.

"The Ways and Means Committee has taken a hard line toward any new tax breaks, especially for the rich," said the aide.

Another congressional staffer, anxious not to be identified for fear of being caught in the middle, said survival of the amendment depends on what Moynihan could find to trade for it in a conference that will decide hundreds of issues of interest to someone. A lot will depend on what Rostenkowski might want, the staffer said.

"It has a fighting chance," he said.