IRS Chief Counsel Advice 202302012  (1/16/23)

If a taxpayer claims a deduction of over $5,000 for a charitable contribution of one property item or a group of similar property items, they must obtain an acknowledgment from the charitable organization. In determining whether the deduction is over $5,000, combine the deductions for all similar items donated to any charitable organization during the year. The taxpayer must use Form 8283, Noncash Charitable Contributions, to provide the IRS with information about the donated property and the qualified appraisal of that property.

Generally, the taxpayer must also obtain a qualified written appraisal of the donated property from a qualified appraiser. The qualified appraisal requirement doesn't apply to charitable donations of certain readily valued property such as cash, publicly traded securities, intellectual property and certain vehicles. (Reg §1.170(f)(11)(A)(ii)(I) and Reg § 1.170A-16(d)(2)(i) )

According to a Chief Counsel Advice, the taxpayer's cryptocurrency donation required a qualified appraisal under the general rules because the taxpayer donated property worth more than $5,000. Also, the donated property wasn't exempt from the qualified appraisal requirement because it wasn't one of the types of property listed as exempt in the regs. Therefore, the taxpayer was required to have a qualified appraisal of the property.

The Chief Counsel noted that the taxpayer's claim that her cryptocurrency donation had a readily ascertainable value because it was listed on a cryptocurrency exchange did not establish reasonable cause for failing to obtain, or attempting to obtain, a qualified appraisal.The taxpayer attached a partially completed Form 8283 to her return and, per the Tax Court, "four mentions of 'appraisal', 'appraiser', or 'appraised' on one page of one form is pretty good notice that substantial noncash donations need to be backed up by an appraisal."

Therefore, the taxpayer's claimed charitable contribution deduction had to be disallowed.