Disclaimer:  I'm not a tax lawyer or accountant.  However, I have had to
answer the appraisal question many times, and have checked it out with
lawyers.

An appraisal is supposed to be "independent," but obviously somebody has
to pay for it.  So while there are very strict definitions of what
constitutes "independence," a museum *may* pay for the appraisal.
However, many museums are uncomfortable doing so for obvious reasons.

Probably the best reason not to pay for an appraisal is that, since the
donor must report to the IRS who paid for the appraisal, the IRS will know
about the museum's involvement, and that could easily raise a red flag.
Not to put too fine a point on it, the IRS knows that the donor has an
interest in a high appraisal and is appropriately suspicious of
information that the donor furnishes; for a museum to pay for the
appraisal may be legal, but it could lead to the *appearance* of
collusion with the donor.

Generally, I tell people who say that they are under pressure to let the
donor know that he may save a buck by having the museum pay for the
appraisal, but he may lose a good part of his tax deduction if he insists
on it!

Andy Finch
AAM Government Affairs
[log in to unmask]


On Tue, 26 Sep 1995, Bill Lazenby wrote:

> 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?
> >
>
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