A donor needs a qualified appraisal to sustain a claim of an income tax charitable deduction of non-cash property if the claimed value or the aggregate claimed value of gifts of similar property made during the year exceeds $5,000. The appraisal may be prepared up to 60 days before the gift and must be completed before the income tax return due date.
The donor also must file IRS Form 8283 with the tax return on which the gift is first claimed or reported. A donee representative must sign the summary, confirm the date of the gift and agree to inform the IRS if the property is sold within three years.
What you can do
Write to those who have recently completed non-cash gifts that fall under IRS substantiation rules. Thank them for the gift and enclose a copy of IRS form 8283 for information.
Remind them that they need to enclose the form with the income tax return on which they claim the gift deduction. Donors should seek legal advice to make sure the appraisal they secure is qualified in the eyes of the IRS.
Complying with IRS appraisal rules is not so difficult that it should dissuade donors from making large non-cash gifts. A reminder from you this time of year can be a service to donors as well as a signal to them that they are not forgotten after they give.
The IRS requires that the following information be included in a donor’s appraisal in order for it to be qualified:
1. A sufficient description of the item
2. Description of physical condition (if tangible personal property)
3. Date or expected date of gift
4. Terms of any agreement or understanding that relate to the use, sale or other disposition of the item
5. Name, address and tax I.D. number of the qualified appraiser who prepared the appraisal
6. Appraiser’s qualifications, including background, experience, education and membership (if any) in professional appraisal associations
7. Statement that appraisal was done for federal income tax purposes
8. Date(s) on which the item was valued
9. Appraised fair market value (FMV) on date of gift or expected date of gift
10. Method of valuation used to determine FMV
11. Basis for valuation, such as any comparable sales transactions
12. Description of fee arrangement between donor and appraiser