When Individuals Require Appraisals
for their Charitable Contributions
When you as an individual donate property to charity, you may be required
to get an appraisal.
IRS requires donors and donee organizations to supply certain information to prove a
taxpayer's right to deduct charitable contributions. If you donate an item (or a group of
similar items) of property worth more than $5,000, certain appraisal requirements apply.
You must get a “qualified appraisal,” attach an “appraisal summary” to the first
tax return on which the deduction is claimed, include other information with the return,
and maintain certain records.
You must receive the qualified appraisal before your tax return is due. While a court has
allowed taxpayers some latitude in meeting the “qualified appraisal,” you should aim
for exact compliance.
The qualified appraisal isn't submitted to IRS in most cases. Instead, the appraisal
summary, which is a separate statement prepared on an IRS form, is attached to the donor's
tax return. However, a copy of the appraisal must be attached for gifts of art valued at
$20,000 or more and for all gifts of property valued at more than $500,000, other than
inventory, publicly-traded stock, and intellectual property.
Failure to comply with the appraisal requirements. The penalty for a taxpayer's
failure to get a qualified appraisal and attach an appraisal summary to his return is
denial of the charitable deduction. The deduction may be lost even if the property was
valued correctly. There is an exception if the failure was due to reasonable cause.
Exceptions to qualified appraisal requirement. A qualified
appraisal isn't required for contributions of:
a car, boat, or airplane for which the deduction is limited to the
charity's gross sales proceeds,
stock in trade, inventory, or property held primarily for sale to
customers in the ordinary course of business,
publicly-traded securities for which market quotations are “readily
- qualified intellectual property, such as a patent.
Also, only a partially completed appraisal summary must be attached to the tax return
for contributions of:
- nonpublicly-traded stock for which the claimed deduction is greater than $5,000 and
doesn't exceed $10,000; and
- publicly-traded securities for which market quotations aren't “readily available.”
Application of rules where two or more gifts are made. If you make gifts of
two or more properties during a tax year, even to multiple donees, the claimed values of
all property of the same category or type (such as stamps, paintings, books,
non-publicly-traded stock, land, jewelry, furniture, or toys) are added together in
determining whether the $5,000 or $10,000 limits are exceeded.
A “qualified appraisal” is a complex and detailed document. It must be prepared and
signed by a qualified appraiser.
An “appraisal summary” is a summary of a qualified appraisal made on Form 8283 and
attached to the donor's return.
In summary, you must be careful to comply with the appraisal requirements or risk
disallowance of your charitable deduction.