To meet the requirements set forth by the IRS, any single donation over $5,000 in value or cumulative donations within a tax year to a single organization over $5,000 require the donor to obtain a qualified appraisal conducted by a qualified appraiser.
A few examples our team has encountered include donation of medicaloffice condos to a healthcare provider, donation of furniture and fixtures and office equipment by architectural firm to a nonprofit organization, and donation of surplus electrical supplies by contractor to Habitat for Humanity.
A qualified appraisal document is made, signed, and dated by a qualified appraiser in accordance with generally accepted appraisal standards generally defined as the requirements set forth in the Uniform Standards of Professional Appraiser Practice. A qualified report should:
- Meet the relevant requirements of Regulations Section 1.17A-13(c)(3) and Notice 2006-96, 2006-46 I.R.B.902
- Not be made earlier than 60 days before the date of contribution to the appraised property
- Note the condition of the property
- Utilize the definition of Fair Market Value as set forth by the IRS
- Outline the appraisal methodologies applied
- A statement that the appraisal will be utilized for federal income tax purposes
- Not involve a prohibited appraisal fee, and includes certain information as stipulated in IRS Document 561
- Be conducted by a qualified appraiser
Who is a qualified appraiser?
The IRS defines a qualified appraiser as an individual who:
- Has earned an appraisal designation from a recognized professional appraisal organization or has met certain minimum education and experience requirements.
- Regularly prepares appraisals for which the individual is paid
- Demonstrates verifiable education and experience in valuing the type of property being appraised
- 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 three-year period ending on the date of the appraisal
- Is not an excluded individual (someone who is the donor or recipient of the property)
The deadline to file is April 15, although it is also possible perform a retrospective appraisal to amend 2018 tax returns. For more information or create a tax plan, contact a member of our Valuation & Advisory team.