(FORTUNE Magazine) – Can a Washington art dealer turn President Reagan into a 23-inch tall tax shelter? Over the past month or two The Art Fund, a small gallery on the outskirts of Georgetown, has been writing to wealthy prospects around the country and offering bronze statues of the president for $3,500. The letter suggests that the Reagan likeness may yield the buyer income tax savings much greater than that. Owners of The Art Fund are William C. Lewis, 00, an entrepreneur who has run a variety of businesses from making food pellets for thoroughbred horses, to marketing machines that throw tennis balls at practicing players; and Lisa Johnson, 00, who received a BA in art history from tk-school tk years ago. Lewis and Johnson generally buy and resell paintings, but a couple of years ago they decided to commission a work and asked Larry Ludtke, a Texas artist, to create a sculpture of Reagan in riding togs. ''I admire the President a hell of a lot,'' explains Lewis, ''and I believe art and politics belong together just as they did in the Renaissance.'' The President didn't know he was being rendered in bronze. Ludtke studied photographs and Reagan's physical proportions and worked and reworked to get the presidential posture right. ''We didn't want him looking like a cowboy,'' says Johnson. ''We wanted him to have great bearing, like an Egyptian pharoh.'' Ludtke's sculpture is an appealing and believable likeness of Reagan in jaunty but dignified stride. Last April Ludtke presented Reagan with the first bronze casting and the President was so taken with it that he had it sent to the White House, where it is on display in the tk-NAME room. But pleasing the President is one thing; cash in the till is another. Last summer he pitched the statue to the Republican Congressional Campaign Committee as an elegant fund raiser. The Art Fund would sell statues to the < committee at a discount, the committee could resell them at a premium and put the profit in the war chest. The committee hasn't turned him down. ''There's definitely a place for the statue,'' says finance chairman Wyatt Stewart. ''The key is identifying the individuals who want to have the piece and help the party.'' While the committee has been fumbling for the key, Lewis and Johnson have grown impatient to recoup their investment, which includes a $15,000 advance to Ludtke and a $20,000 advance to the foundry. So Lewis began writing to people he assumed were both affluent and Republican. The letter maintains that The Art Fund's asking price of $3,500 for the statue is only a fraction of its appraised value of up to $15,000 and that ''donating a Bronze to a museum, foundation or charity may offer you attractive tax benefits.'' If the IRS were to recognize such a donation as a $15,000 gift, a donor in the 50% income tax bracket might reduce his taxes by $7,500. If all 300 buyers were able to claim such deductions, the Treasury would be out $2,250,000. So far none of the 20 or so prospects has replied. Before telephoning for an order blank, consider. Since the Tax Reform Act of 1984 (CK) the IRS has cracked down on deductions claimed for non-cash gifts. Also, the value of the statue is likely much less than the $15,000 Lewis mentions. One of the appraisers The Art Fund relied upon, O'Toole-Ewald Art Associates of New York, judged the market value to be only $10,500. To reach $15,000 Lewis tacked on a 30% dealer's commission. On closer scrutiny, value shrinks still further. O'Toole-Ewald appraised the statue at $10,500 on the assumption that no more than 100 would be cast and that they would be released into the market slowly, half a dozen a year, say, not 300 statues dumped on the market all at once. Such a flood would depress the value of each statue by as much as two-thirds, says the appraiser. By that reckoning the statue is worth the $3,500 The Art Fund is charging for it, and no more.