| Charitable Contributions / When appraisals are required for charitable contributions |  |
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When you as an individual donate
property to charity you may be required to get an appraisal.
IRS requires donors and donee organizations to supply certain
information to prove a taxpayer's right to deduct charitable
contributions. In addition to certain substantiation requirements, if
you donate an item (or a group of similar items) of property worth more
than $5,000, you must get an appraisal. To comply, you must get a
"qualified appraisal," attach an "appraisal summary"
to the first tax return on which the deduction is claimed, include other
information with the return, and maintain certain records. Also, the qualified appraisal must
be received by the donor before the tax return due date. While a court
has allowed taxpayers some latitude in meeting the "qualified
appraisal," I think you should aim for exact compliance. The qualified appraisal isn't
submitted to IRS. In contrast, the appraisal summary, which is a
separate statement prepared on an IRS form, is attached to the donor's
tax return. Failure to comply with the appraisal
requirements. Although there's no specific penalty in the
statute for failure to get a qualified appraisal or to attach an
appraisal summary to the taxpayer's return, a charitable deduction is
allowed only if the contribution is verified according to IRS regs.
Thus, where no appraisal was obtained for nonpublicly-traded stock that
was donated, the Tax Court refused to allow a full deduction even though
the parties agreed that the claimed value represented the fair market
value of the stock. Property for which qualified
appraisal is required. A qualified appraisal isn't required for
publicly-traded securities. Also, only a partially completed appraisal
summary need be attached to the tax return for contributions of: •
Nonpublicly-traded stock for which the claimed deduction is
greater than $5,000 and doesn't exceed $10,000; and •
Publicly-traded securities that aren't "readily
available." Inventory and scientific equipment.
A special rule applies for deductions claimed for certain "related
use" contributions of inventory or scientific equipment by a
corporation. In determining whether the $5,000 threshold has been
exceeded, only the excess over cost is considered. Application of rules where two or
more gifts are made. If you make gifts of two or more properties during a tax year, even to multiple donees,
the claimed values of all similar property (that is, of the same generic
category or type, such as stamps, paintings, books, publicly-traded
stock, land, jewelry, furniture, or toys) are added together in
determining whether the $5,000 or $10,000 limits are exceeded. A "qualified appraisal"
is a complex and
detailed document that among other things is prepared and signed by a
qualified appraiser. An "appraisal summary"
is a summary of a qualified appraisal that, among other things is made
on Form 8283, and attached to the donor's return. In summary, you must be careful to comply with the appraisal requirements or risk disallowance of your charitable deduction. |
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