Valuing and Substantiating Charitable Art Contributions
/What is a Charitable Contribution Appraisal?
A charitable contribution appraisal refers to the process of determining the value of a non-cash donation made to a charitable organization. When individuals or businesses donate assets such as property, artwork, or any other item of value to a charitable organization, they may be eligible to claim a tax deduction for the fair market value of the donated item. In order to claim a tax deduction, the donor in most cases is required to obtain an appraisal from a qualified appraiser.
As art appraisers, our role is to provide an independent and unbiased opinion of the item’s fair market value at the time of the donation.
When is a Charitable Contribution Appraisal Required?
A charitable contribution appraisal is generally required in the following circumstances:
Non-Cash Donations
Value Exceeds $5,000
Exception for Publicly Traded Securities
Substantially Appreciated Property
It’s important to note that the specific rules and requirements for charitable contribution appraisals may vary, and it is always advisable to consult with a professional or refer to the latest guidelines provided by the IRS for the most accurate and up-to-date information.
Key Points to Understand About a Charitable Contribution Appraisal
Hiring a Qualified Appraiser
The appraisal must be conducted by a qualified appraiser who has the necessary certifications to perform appraisals for the type of donation. Shelley Hall is a certified member of the International Society of Appraisers with Fine Arts Specialty. She has also worked in the art business since 1994 as a consultant and artist herself, former gallery owner and professional appraiser.
Written Appraisal
The appraisal must be in writing and include detailed information about the piece, the method used to determine its value and the appraiser’s qualifications.
Fair Market Value
The appraiser determines the fair market value of the donated artwork, which is the price that a willing buyer would pay and a willing seller would accept in an open market transaction.
Timing
Generally, the appraisal should be completed close to the time of the donation. For any donation valued at $5,000 or more, a formal appraisal is required.
IRS Guidelines
The IRS provides very specific guidelines and requirements for charitable contribution appraisals. It is important to comply with these guidelines to ensure the deduction is accepted by the IRS.
Record Keeping
Both the donor and the charitable organization should retain copies of the written appraisal and any supporting documents for their records. These records should be kept for a minimum of three years after filing the tax return claiming the deduction.
If you have made a charitable art contribution, or are planning on making a donation, reach out to Shelley Hall to get started with an appraisal. Locations in Portland, OR and San Diego, CA.