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The Gentle Art of Giving

Giving is good for the soul. It is also rewarding to the knowledgeable donor.

Charitable giving has long been encouraged through tax deductions. America's libraries, museums, churches, and other nonprofit institutions were enriched last year by gifts totaling $175 billion, a number greater than the national budgets of two-thirds of the world's countries.

While our artistic and cultural heritage is being preserved, the dramatic price increases in the collectibles market during the past decade have encouraged high appraisals. To address this trend the IRS relies upon panels of experts to review donations, and the 1984 and 1986 Tax Reform Acts closely define the responsibilities of donor, donee, and appraiser.

Deductions for charitable contributions are allowed only for those who itemize. Deductions claimed for certain gifts of appreciated property may be subject to the alternative minimum tax. The 1991 Budget Reconciliation Bill restored the full charitable deduction for donations of artistic works, books, manuscripts, and similar property to museums and other nonprofit institutions that had been substantially restricted in 1986. The restored deduction is equal to the full fair market value of the donation. Donors of property valued over $5000 must have a qualified appraiser prepare a qualified appraisal.


IRS regulations define a qualified appraiser as a person experienced and knowledgeable about the property being appraised. The appraiser may not be the donor, donee, a person from whom the donor acquired the property, or anyone employed by or related to any of the above.


The appraisal report must be prepared no earlier than sixty days prior to the contribution. It must describe the property in sufficient detail for identification purposes and include a statement of condition and an explanation of any restrictions or reserves on the property.

The fair market value must be stated along with an explanation of the specific basis and method of valuation used to determine that value. Other requirements include:

dates of contribution and of appraisal 
a statement that the appraisal was prepared for income tax purposes 
a description of the fee arrangement between donor and appraiser 
the appraiser's name, address, qualifications, signature, and tax-payer identification number [social security number]

Donors must submit a summary of the appraisal on IRS form 8283 Noncash Charitable Contributions appraisal summary. The full appraisal report is retained by the donor for reference in case of audit. The appraisal summary must include the date, cost, and manner of donor acquisition. A deduction will not be disallowed if this information is not known, but an explanation must be attached. Form 8283 must be filed with the donors return for the tax year in which the property, held a minimum of six months, is contributed. It must be signed and dated by both donee and appraiser. Additional requirements are:

a description of the property, including a condition statement 
date of contribution 
appraised fair market value 
a description of the fee arrangement between donor and appraiser 
donor, donee, and appraiser's name, address, and tax-payer identification number
The donee's signature acknowledges receipt of the property but does not imply concurrence with the appraised value.


Donees must file IRS form 8282 Donee Information Return if donated property valued over $5000 is sold, exchanged, or otherwise disposed of within two years of receipt. This form must be filed within ninety days of disposition and a copy provided to the donor. Required information includes:

a description of the property 
dates of contribution and disposition 
the amount received on the disposition 
donor and donee name, address, and tax-payer identification number.

The donor will be penalized 30% of the unpaid taxes if the property is over-appraised by 150%.

The donee is subject to a penalty of $50 for failure to file form 8282.

The appraiser is subject to a fine of $1000 and disbarment for inaccurate appraisals.

The 1984 tax law identified penalties on valuation understatements in estate and gift tax returns. If the claimed value is two-thirds or less of the correct value, the penalty ranges from 10% to 30% of the tax liability depending upon the valuation.


An appraisal will be disallowed by the IRS if the appraisal fee is based on a percentage of the appraised value. This does not apply to fees paid for appraisals by members of the Art Dealers Association of America. An appraisal fee is deductible as an expense paid to determine income tax liability.


There are numerous professional appraisal associations, each with its own requirements for membership and certification. Those listed below are among the leading organizations specializing in appraisals of personal property.

American Society of Appraisers.
Appraisers Association of America. 
International Society of Appraisers. 
Art Dealers Association of America.