After ten years, the Internal Revenue Service (IRS) has finalized its regulations regarding reporting cash and other charitable contributions made by individuals, partnerships or corporations. Wealth Management reported that the changes made to the proposed regulations before they were finalized were minor, but nevertheless are worth paying attention to.
One of the changes has to do with the qualification of appraisers. According to the IRS, as reported by Wealth Management, the appraiser must have an educational background and experience in valuing the type of property; this means successfully completing the required coursework at a college, professional organization or apprenticeship and having at least two years of professional experience. The appraiser must also have been designated as demonstrating competency in his/her profession by a recognized professional appraiser group.
The regulations also describe who doesn’t count as an appraiser: someone who takes fees for his/her work, although they are not supposed to; the donor or recipient of the property; the person from whom the donor obtained the property (whether through sale, exchange or as a gift); or anyone who is married or related to the donor. In addition, the appraiser cannot be an employee or an independent contractor of the donor, the latter especially if less than half of the appraisals were done for other people.
As required by the Uniform Standards of Professional Appraisal Practice from the Appraisal Standards Board of the Appraisal Foundation, the qualified appraisal must include the following: a detailed description of the property; the condition of the property (for real or tangible personal property); the effective date of the valuation; the fair market value and the method of valuation used to determine the property’s value; the terms of agreement between the donor and the recipient; the date of the contribution (or anticipated date); and the appraiser’s information, including name, address, taxpayer ID number and educational and professional experience.
In addition, the appraiser must sign the paperwork and provide the date of the appraisal report, along with a statement that the appraisal was done for tax purposes. The appraisal cannot be submitted less than 60 days before the contribution, nor can it be sent after the tax return that includes the claimed deduction of the contribution is due. The deadlines are different for donors that may be business partnerships of S-corporations. The 60-day period refers to the due date of the return or the amended return, including extensions.
If you own a business partnership or an S-corporation and need assistance with maximizing your charitable tax deductions, contact Bill Abrams, the partner-in-charge of AGMB’s business management, corporate and securities law, and tax law practices. He has appeared on national and local news programs commenting on a broad range of tax and legal issues, has been quoted in publications such as Forbes, The Los Angeles Times, and The Chicago Tribune and has published articles in The Journal of Accountancy. Contact Mr. Abrams at 212-201-1172 or email him at babrams@agmblaw.com. For more information, visit www.agmblaw.com.
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