>Hi folks, I have a legal question that I hope someone will be able to answer.
>
>We all know that the IRS does not allow museums to appraise collections
>which they purchase or receive as a donation, but can a museum pay for a
>professional appraisal of materials that are then donated or purchased and
>for which the owner then takes a deduction?
>
>Any insight appreciated.
>
>Thanks,
>
>Bill


Bill,

The answer to your question is no.  IRS regulations are indeed quite clear
on their opposition to museums appraising items intended for donation to
that museum, as it creates a conflict of interest.  The burden of arranging
for an appraisal is upon the prospective donor.  Museums, however, are
allowed to arrange for appraisals of items already in its collections,
provided the appraisals are made for insurance purposes only.

But a Museum should not pay for an appraisal of items intended for donation
to its collection, especially if the intent is to allow the donor access to
the appraisal figures for the purpose of a tax deduction.  IRS regulations
state that appraisals of items intended for donation are the sole
responsibility of the donor.  In the eyes of the IRS, paying for an
appraisal of property not yet donated, is akin to providing an appraisal,
and thus creates a clear conflict of interest.

Only after the donation is complete, and transacted with properly executed
Deed of Gift documents, should the museum consider arranging for
appraisals.  When the gift documents are signed the items become the
property of the museum.  Otherwise, the appearence of conflict of interest
exists.  It is highly irregular for a museum to pay for an outside
appraisal and afterward, accept the items as a donation.  Rather, it is in
the best interest of the museum to complete the donation transaction, and
then, and only then, arrange for valuation.  Museums are in precarious
positions when it comes to appraisals.  We must avoid all conflicts, as
well as all APPEARENCES of conflict.

Additionally, paying for appraisals of items the museum does not own is
ill-advised.  Even with the "promise" of donation, there is no legal
responsibility upon the prospective donor to transfer property rights to
the museum, unless there is a properly executed contract.  It makes good
sense to wait until the items in question actually become the legal
property of the museum before arrangements for appraisals are made

For your information, if the museum pays for a professional appraisal of
items which HAVE BEEN donated to its collections, then it's OK, as long as
the museum does not share that information with the donor.  If so, it
creates the appearence of conflict.  Appraisals of museum collections are
(or should be) considered priveledged information and should never be
shared with the general public, donors included, under any circumstances.
Only individuals operating in an official capacity within the museum or its
governing body should have access to appraisal information.

HBC

Henry B. Crawford

Curator of History
Museum of Texas Tech University
Box 43191
Lubbock, TX  79409-3191
806/742-2442
FAX 742-1136
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