 Helpful Articles
from David Vollrath,
Union County Foundation Executive Director
The Foundation encourages you to work closely with your professional advisor(s)
as you develop your estate plan and consider your present and future charitable goals. |
When Do Charitable Gifts Require an Appraisal?
(Part of a series of articles on charitable giving and the Union County Foundation
by David Vollrath - Exec. Dir.)
If you have ever considered making a non-cash donation to charity perhaps you have wondered whether an appraisal
is necessary to substantiate your charitable gift. More often than not an appraisal is not necessary. If the gift
is cash or a publicly traded security than the gift amount consists simply of the fair market value. For a stock
gift the fair market value is considered to be the average between the high sale price and the low sale price of
the stock on the date of the gift. This information can generally be easily obtained from your stockbroker or from
the Internet.
A “property” gift valued at over $5,000 (or $10,000 for stock in a closely held family business) does require an
appraisal. According to requirements, someone who “holds him or herself out to the public as an appraiser” must
conduct the appraisal. The appraiser does not necessarily need to have specific qualifications but must be independent
and must meet certain rules. The appraiser and the donor cannot be one and the same, in other words you cannot
appraise your own gift. The appraiser cannot derive their fee based on the amount of the appraisal and must acknowledge
that the appraisal has been made for tax purposes. The appraisal date must not precede the actual gift date by
more than 60 days and-must be completed before the tax return is due, including any filing extensions.
The appraisal must describe the property in some reasonable detail, should include the general condition of the
property, and should list the date of the contribution. Any specific agreements relating to the sale of the property
should be disclosed. Also on the appraisal the appraiser should list his or her qualifications and background.
The methodology for determining the value should be described.
The actual appraisal should be retained by the donor and is not actually sent to the IRS. One exception to this
is works of art valued at more than $20,000. The IRS does require Form 8283 for non-cash charitable contributions.
Your tax professional will file this form with your tax return, using your appraisal to support your deduction.
Is the cost of the appraisal deductible? The appraisal cost is not a charitable contribution but may be included
as a miscellaneous itemized deduction. Such a deduction will only apply to the extent that the taxpayer's total
misc. deductions exceed 2% of his/her adjusted gross income.
Gifting non-cash property is a wonderful charitable act to consider. Clearly the proper application of appraisals
can play an important role in reducing a donor's income taxes. As is always the case, to assure proper compliance
you will want to consult your financial professional regarding your specific situation.
The Union County Foundation encourages you to consider your present and future charitable
goals. The Foundation is equipped to help you achieve these goals by providing: planned giving and estate planning
resource information, charitable gift annuities/life income plans, and a broad array of charitable choices. Please
call us at 937-642-9618, email us, reference our website, or stop by our Marysville office at 126 N. Main St. We
are committed to helping you.... “preserve your footprint in time.” |
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