When making a Charitable Donation for tax proposes, the IRS terms this a “Non-Cash Charitable Donation.”
The appraisal process is relatively easy and I will try to help you to understand what the process is.
When do you need an appraisal for a Non-Cash Charitable Donation?
- When the Fair Market Value (FMV) of the assets being donated, by a person, a family or a company, is greater than $5,000, an appraisal is required as supporting documentation of the assets, the FMV, and the name of the donation center.
- If the FMV of the assets is less than $5,000 and appraisal is not needed.
Requirements of a Non-Cash Charitable Donation:
- The appraiser must visually inspect the assets BEFORE they are transferred to the donation center.
- The type of value must be Fair Market Value.
- The donation center must be an IRS qualified donation center.
- The appraisal must be completed by an independent personal property appraiser.
What are the requirements of the Appraiser?
- The Appraiser must have at least 2 years of experience in the trade or business of buying, selling or appraising the type of assets being appraised.
- The Appraiser must fully describe their qualifications and experience in the appraisal.
- The Appraiser must regularly prepare appraisals for which they are paid.
- The Appraiser must demonstrate verifiable education and experience in valuing assets.
- The Appraiser has not been prohibited from practicing before the IRS. The appraiser is not an excluded individual.
- The Appraiser must complete form 8283, Section B, part III Top of Form and mail it to the donor.
IRS Form 8283 can be found on the IRS web site together with all the information regarding Non Cash Charitable Donations.
The following practices can create reasons for the IRS to disqualify a donation:
- The appraisal was completed after the assets were donated.
The IRS is very strict that the on-site inspection of the assets must be completed before the assets are removed and sent to the donation center.
- The Person who donates the assets cannot be the Appraiser.
- The Charitable Organization cannot act as the Appraiser.
- The Charitable Organization must be a qualified IRS donation center.
- The Appraiser must not be a party to the transaction or donation.