Appraisal Requirements for Complex Assets
Q. How do the appraisal rules work for contributions of complex assets such as privately-held C or S stock, real estate, etc?
A. Contributions of property worth more than $5,000, other than publicly-traded securities, require a "qualified appraisal" to meet tax requirements. The appraisal must be done no earlier than 60 days before the property is donated and no later than the due date of the tax return for the year of the gift, including extensions.
A qualified appraisal is an appraisal document that: (1) Relates to an appraisal that is made not earlier than 60 days before the date of contribution of the appraised property nor later than the due date of the return on which a deduction is first claimed; (2) is prepared, signed, and dated by a qualified appraiser; (3) includes a statement that the appraisal was prepared for income tax purposes; and (4) includes the appraised fair market value of the property on the date (or expected date) of contribution. Sec. 1.170A-13(c)(3)(i)(A), (B), (ii)(G), (I), (iv)(B), Income Tax Regs.
The term "qualified appraisal" means an appraisal prepared by a qualified appraiser (see description of "qualified appraiser," below) which includes:
- A description of the property appraised,
- The fair market value of such property on the date of contribution and the specific basis for the valuation,
- A statement that such appraisal was prepared for income tax purposes,
- The qualifications of the qualified appraiser,
- The signature and TIN of such appraiser, and
- Additional information as the Secretary prescribes in such regulations.
A qualified appraiser is an individual who includes on the appraisal summary a declaration that: (1) The individual either holds himself or herself out to the public as an appraiser or performs appraisals regularly; (2) the appraiser is qualified to make appraisals of the type of property being valued; and (3) the appraiser understands that an intentionally false or fraudulent overstatement of the value of the property described in the qualified appraisal or appraisal summary may subject the appraiser to a civil penalty under section 6701 for aiding and abetting an understatement of tax liability. Sec. 1.170A-13(c)(5)(i)(A), (B), (D), Income Tax Regs. An individual is not a qualified appraiser if the individual is the donor, the donee, any person employed by the donor or donee, or an appraiser who is regularly used by the donor or donee and who does not perform most of his or her appraisals for other persons. Sec. 1.170A13(c)(5)(iv)(A), (C), (D), (F), Income Tax Regs.