With a rise of donations of complex assets valuation analysts are frequently valuing assets such as closely held company stock, restricted stock, limited partnership interests and limited liability company interests, for charitable contribution purposes.
Many taxpayers have lost significant contribution deductions for failure to follow the numerous procedural requirements regarding valuation timing, methodology and reporting. The extent that the value of the contributed asset meets certain dollar thresholds, it is required that the valuation is attached to the donor’s U.S. federal income tax returns. In the case of contributions of property for a claimed deduction of more than $5,000, disclosure requirements are met if a qualified appraisal is obtained for such property.
The IRS broadly defines a qualified appraisal as “an appraisal that: (i) conforms to the regulations or other guidance prescribed by the Secretary and (ii) is conducted by a qualified appraiser in accordance with generally accepted appraisal standards.”
It is important to engage an experienced valuation professional who knows the requirements for a qualified appraisal. At VRC, our valuation professionals assist business owners, families, estate planning attorneys and wealth managers in planning and documenting the donation of complex assets.