Qualified Appraisal
A qualified appraisal of any property means an appraisal that's treated as a qualified appraisal under IRS regs or other guidance; and conducted by a qualified appraiser in accordance with generally accepted appraisal standards and any regulations or other prescribed guidance (Code Sec. 170(f)(11)(E)(i)(I)).
Qualified Appraiser
A qualified appraiser is an individual who meets all the following requirements. The individual:
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Either (a) has earned an appraisal designation from a recognized professional appraiser organization for demonstrated competency in valuing the type of property being appraised, or (b) has met certain minimum education and experience requirements.
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Regularly prepares appraisals for which he or she is paid.
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Must have verifiable education and experience in valuing the type of property subject to the appraisal. An individual is treated as having education and experience in valuing the type of property if, as of the date the individual signs the appraisal, the individual has successfully completed (for example, received a passing grade on a final examination) professional or college level coursework in valuing the type of property, and has two or more years of experience in valuing the type of property., The Preamble to the regs provides that the reference to a passing grade on a final examination in Reg § 1.170A-17(b)(2)(i)(A) is merely an example of what is considered successful completion of professional or college-level coursework, and other evidence of successful completion may be sufficient. However, mere attendance at a training event is not sufficient, and evidence of successful completion of coursework is necessary. The regs provide that coursework must be obtained from professional or college-level educational institutions, appraisal organizations, employer educational programs, or recognized professional trade organizations.
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Has not been prohibited from practicing before the IRS under section 330(c) of title 31 of the United States Code at any time during the 3-year period ending on the date of the appraisal.
Final regulation 1.170A-17 related to qualified appraisals and qualified appraisers applies to contributions made on or after January 1, 2019, but taxpayers may rely on the rules of this section for appraisals prepared for returns or submissions filed after August 17, 2006.
The appraiser must complete Part III of Form 8283. See IRC Section 170(f)(11)(E), Notice 2006-96, and Regulations section 1.170A-13(c)(5) for details.
Appraisal Timing
The appraisal needs to be made no earlier than 60 days before the appraisal property's contribution date and no later than the due date (including extensions) of the return on which the charitable contribution deduction is first claimed for the donated property or, if the deduction is first claimed or reported on an amended return, the date the amended return is filed.
Appraisal Fees
Appraisal fees are generally not included as part of the charitable contribution; however, they may be deductible as a Tier 2 miscellaneous itemized deduction as an expense paid in connection with determining tax liability (Rev Rul 67-461). The TCJA of 2017 suspended the deduction of Tier 2 miscellaneous deductions for years 2018 through 2025. Therefore, taxpayers get no tax deduction in those years for costs of appraising donated property.
Form 8283
Thorough completion of Form 8283, Section B, is a necessity when claiming noncash contributions that require appraisal. In addition to the declaration and signature of the appraiser in Part III, the details of the item(s) donated must be completed in Part I, and Part IV must be completed and signed by a representative of the donee (charitable organization). Generally, it is not necessary to attach a copy of the appraisal, but one exception is if the donated property is art valued at $20,000 or more. See the instructions to the 8283 for other times when the appraisal is to be attached.
Caution - Easily Audited
Since written verification or a bank record is required for most contributions, the IRS can easily audit charitable contributions by correspondence. Practitioners should be prudent in accepting their client’s word for cash and goods contributions since they may end up as adjustments in the future and any pattern of promoting unverified contributions will be easily identified.