A proposed amendment to President Bush's tax plan could sharply reduce the tax deduction that corporations and private individuals can claim when they donate intellectual property to colleges and universities.

The proposal is part of the Jobs and Growth Tax Act of 2003 (S 2), currently being debated by the Senate Finance Committee. It would permit donors of "patents and similar property" -- including copyrights, trade secrets, and software -- to deduct the lesser of either the amount of money they spent in creating the item, or the item's fair-market value. The current law permits the donors to deduct the fair-market value of the item, in some cases minus the development costs.

If passed, the law would affect all such donations made after May 7, 2003.

Few people have heard yet about the proposal, and so far opinions vary on the impact it might have. Matthew W. Hamill, a senior associate with the Institute for Higher Education Policy, said that colleges and companies do a fair amount of joint research to develop new products and techniques. Some of that research comes about through intellectual-property donations from businesses.

"The language is problematic," said Howard S. Ende, a partner with the law firm Drinker, Biddle & Reath and former general counsel at Princeton University. He said the proposal apparently reflects the belief that corporations are taking advantage of the current law by inflating the fair-market value of their donations and thus taking unwarranted deductions.

Randolph M. Goodman, a partner at Wilmer, Cutler & Pickering who specializes in tax-exempt organizations, said the law "could really create a disincentive to give intellectual property to teaching and research institutions who could make the best use of it."

Or it could have little effect at all, said Andrew Cohn, spokesman for the Wisconsin Alumni Research Foundation, which licenses and markets patents created by researchers at the University of Wisconsin at Madison.

While he couldn't speak for other institutions, Mr. Cohn said, Wisconsin does not get any gifts of intellectual property that it then turns around for its own purposes. That kind of gift probably is not worth much anyway, he said, because donors "wouldn't be donating it if it were worth more than what they paid" for it.