Thanks, Marc,
I was under the impression that the
recipient was forbidden to pay for the appraisal. I guess technically it is not
illegal, just ill-advised? When I spoke to someone in the IRS office a few
years ago, I was told that the entire burden of the appraiser was on the one
wanting the tax deduction.
At least our organization officially has
in our Policy & Procedures Manual that we do not get involved in
appraisals, except to refer people to the organizations that an earlier person very
handily posted the links to.
Nothing can ever be simple when it comes
to the IRS…
Lisa
Lisa Shockley, Curatorial Specialist, 3-D
Collections
Union Station/Kansas City Museum
30
816-460-2055
"Where there is Peace; there is
Culture;
Where there is Culture; there is
Peace."
Nicholas Roerich (1874-1947)
From:
Sent: Friday, May 30, 2008 9:53 AM
To: [log in to unmask]
Subject: Re: Question regarding
appraisals and Museum
Beat
me to the punch, Lisa!
A
few tidbits from IRS Publication 561 (4/2007), Determining the Value of Donated
Property. Appraisals are not required for deductions of $5,000 or
less, so maybe this gets you off the hook, Debra?
One
clarification of what Lisa wrote. Excluded appraisers include
employees of both the donor and the donee. However, someone hired by
either (as opposed to employed) is not excluded. Otherwise, the donor
themselves would be prohibited from hiring an appraiser. In fact, Pub 561
does not seem to mention who pays for the costs of the appraisal, just that the
cost can not be added to the deduction taken by the donor. The key issue
for the museum is risk management. I would strongly advise not only that
the museum not pay for the appraisal, but not get involved in selecting the
appraiser. Referrals of associations of appraisers should be safe, but
referrals of individuals should be avoided. The museum does not want to
be a party to any future legal action between the IRS and the donor, and
must make all efforts to have an arm's length transaction. The following
is taken directly from Pub 561.
"Your deduction for
contributions of paintings, antiques, and other objects of art, should be
supported by a written appraisal from a qualified and reputable source, unless
the deduction is $5,000 or less. Examples of information that should be
included in appraisals of art objects—paintings in particular—are
found later under Qualified Appraisal.
Generally, if the claimed
deduction for an item or group of similar items of donated property is more
than $5,000, you must get a qualified appraisal made by a qualified appraiser.
You must also complete Form 8283, Section B, and attach it to your tax return.
See Deductions of More Than $5,000, earlier.
A
qualified appraisal is an appraisal document that:
· Is
made, signed, and dated by a qualified appraiser (defined later) in accordance
with generally accepted appraisal standards,
· Meets
the relevant requirements of Regulations section 1.170A-13(c)(3) and Notice
2006-96, 2006-46 I.R.B. 902 (available at
www.irs.gov/irb/2006-46_IRB/ar13.html),
· Relates
to an appraisal made not earlier than 60 days before the date of contribution
of the appraised property,
· Does
not involve a prohibited appraisal fee, and
· Includes
certain information (covered later).
Qualified appraiser. A qualified appraiser is an
individual who meets all the following requirements.
1. The individual 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. For real
property, the appraiser must be licensed or certified for the type of property
being appraised in the state in which the property is located. For property
other than real property, the appraiser must have successfully completed
college or professional-level coursework relevant to the property being valued,
must have at least 2 years of experience in the trade or business of buying,
selling, or valuing the type of property being valued, and must fully describe
in the appraisal his or her qualifying education and experience.
2. The individual regularly prepares appraisals for which he or she is
paid.
3. The individual demonstrates verifiable education and experience in
valuing the type of property being appraised. To do this, the appraiser can
make a declaration in the appraisal that, because of his or her background,
experience, education, and membership in professional associations, he or she
is qualified to make appraisals of the type of property being valued.
4. The individual 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.
5. The individual is not an excluded individual.
In
addition, the appraiser must complete Form 8283, Section B, Part III. More than
one appraiser may appraise the property, provided that each complies with the
requirements, including signing the qualified appraisal and Form 8283, Section
B, Part III.
Excluded individuals.
The following persons cannot be qualified appraisers with respect
to particular property.
1. The donor of the property, or the taxpayer who claims the deduction.
2. The donee of the property.
3. A party to the transaction in which the donor acquired the property
being appraised, unless the property is donated within 2 months of the date of
acquisition and its appraised value is not more than its acquisition price.
This applies to the person who sold, exchanged, or gave the property to the
donor, or any person who acted as an agent for the transferor or donor in the
transaction.
4. Any person employed by any of the above persons. For example, if the
donor acquired a painting from an art dealer, neither the dealer nor persons
employed by the dealer can be qualified appraisers for that painting.
5. Any person related under section 267(b) of the Internal Revenue Code to
any of the above persons or married to a person related under section 267(b) to
any of the above persons.
6. An appraiser who appraises regularly for a person in (1), (2), or (3),
and who does not perform a majority of his or her appraisals made during his or
her tax year for other persons.
In
addition, a person is not a qualified appraiser for a particular donation if
the donor had knowledge of facts that would cause a reasonable person to expect
the appraiser to falsely overstate the value of the donated property. For
example, if the donor and the appraiser make an agreement concerning the amount
at which the property will be valued, and the donor knows that amount is more
than the FMV of the property, the appraiser is not a qualified appraiser for
the donation."
Marc
American Conservation
Consortium, Ltd.
www.conservator.com
860-386-6058