Tax Related Appraisals
Experts in preparing Qualified Appraisals compliant with current Treasury Regulations
Mary and Mark have developed and taught courses for the American Society of Appraisers that specifically address the development and reporting requirements for these types of complex appraisal assignments. We stay abreast of changes in Treasury and IRS regulations that may impact how we provide accurate, defensible valuations for these intended uses.
We understand that in most instances the jewelry component of a taxable estate is not the most valuable asset. However, the jewelry often has the most sentimental or emotional attachment of any asset and can have enormous personal value to the family. We approach these assignments with respect and compassion. We can help families understand the difference between sentimental value and monetary value. The specific definition of Fair Market Value as determined by 26 CFR, section 20.2031-1(b) of the Treasury Regulations is used for these appraisals.
In general, these are relatively complex appraisals with more detailed explanations of how the fair market value was determined and slightly less emphasis placed on descriptions. Although not required by the IRS, we prepare this type of appraisal to the level of a Qualified Appraisal as defined by Treasury Regulations. We're here to assist you in providing accurate, defensible value for the property in the estate. Our goal is to ensure that nothing in or about our appraisal of the jewelry will raise a red flag that could trigger an audit or challenge. Obviously, we can’t control what the IRS does but we do our job with due diligence and competency.
If you’re making a non-cash charitable contribution, we have an in-depth understanding of our statutory requirements under 26 CFR § 1.170A-17. For most types of jewelry assets, Mary and Mark exceed the requirements of a Qualified Appraiser as defined within the regulations and are very familiar with the appraiser’s duties in your filing of Form 8283. Federal Regulations require the tax payer to provide an accurate Fair Market Value on Form 8283 for any property that was donated and for which a tax deduction is claimed. At specific value levels a Qualified Appraisal is required and at higher values the appraisal must be filed along with the tax return. IRS publication 561 offers guidance on determining fair market value and explicitly recommends that an appraisal is generally warranted when donating jewelry due to the complex nature of determining its fair market value. The definition of Fair Market Value specified in 26 CFR section 1.170A-1( c )( 2 ) is used for these appraisals.
When non-cash gifts are received, an appraisal can help your tax advisor determine if the fair market value exceeds the amount that can be transferred without tax liability. This type of appraisal can also help your tax advisor establish an updated cost basis for potential future tax situations such as capital gains determination. If the gift is taxable, the appraisal will help in the determination of the amount of tax owed. These reports use the specific definition of Fair Market Value specified in 26 CFR 25.2512-1. As with every tax related appraisal we prepare, our reports and methodology meet the requirements of a Qualified Appraisal whether specified in the regulations or not.
Under certain circumstances, a casualty loss of personal property may qualify for an income tax deduction. Between 2018 and 2027 this deduction is only available within federally declared disaster areas. These appraisals require a determination of the value at the time of acquisition, immediately prior to the loss and the value immediately after the loss occurred. Fair Market Value is used for each valuation to help your accountant or attorney arrive at the amount that may qualify for the tax deduction. This type of appraisal is complex and time-consuming, but necessary if a tax deduction for a casualty loss is taken when filing Form 4684.
If State or local inheritance taxes are owed, the specific requirements of that jurisdiction will dictate the value definition and requirements of the appraisal. Often the required value type is fair market value and in many jurisdictions the statutes follow the Federal estate tax regulations. We provide accurate, defensible valuations that are compliant with the appropriate statutes within the jurisdiction.