- Claiming a charitable contribution for property donations. The IRS requires you to attach a qualified appraisal for a deduction exceeding $5,000. Generally you can claim a deduction equal to the property’s fair value.
- A gift or a sale of a business or property to a family member. The IRS can challenge the valuation of such a sale many years later when the donor dies. They can claim that the sale was undervalued and that appreciation from the date of gift or sale should be in the estate tax return.
For both circumstances I would recommend following the specific charitable donation appraisal requirements as spelled out in IRS Notice 2006-96. According to this ruling, a qualified appraiser must:
- Be certified by a professional organization or meet the education and experience requirements established by the IRS.
- Be familiar with evaluating the type of property being donated.
- Regularly offer appraisals in return for a fee.
- Comply with any other requirements in the applicable tax regulations.
This is definitely an area where you must consult with an experienced tax CPA or attorney before the donation, gift, or sale.