Appraising Artwork Donations for Tax Purposes
When a collector makes generous decision to donate an artwork, antique or collectible to a charity, museum or institution, they must consider the regulations and rules set forth by the IRS if they want to claim a tax deduction. Generally, if the claimed deduction for an item or “group of items” of donated property has a Fair Market Value above $5,000, then you must obtain a qualified personal property appraisal from a “qualified appraiser” and attach IRS Form 8283 to your personal return. Usually when clients come to us to conduct a donation appraisal, the donated item has already been accepted by an institution, but in some cases we can advise clients on where to donate an item and help them with the submission process.
Roy Lichtenstein, Brushstrokes, 1967, screenprint on paper, 23 x 31 inches
Cost of Appraisal for Donation
Our fees for donation appraisals are always based on our hourly rate and never on the value of the item. Once we have completed the inventory of the objects to be appraised, we will send a fee estimate and make sure we have a client’s approval of all fees before beginning valuation research and report preparation.
What is the Fair Market Value of a Donation?
Fair Market Value is defined in Treasury Regulation §1.170A-1(c)(2) as, “The price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.”
Sydney Mortimer Laurence, Mount McKinley, 63° North Latitude, Alaska, Altitude 20.390 Feet, c. 1911-1912, oil on canvas, 36-5/8 x 54-5/8 inches
Importance of Objective Appraisals
As an independent appraisal firm, McAllister/Fossum Appraisal Services’ IRS non-cash charitable contribution appraisals are completely objective. We apply our many years of experience to consider the quality, relative importance, history and condition of your artwork and collectibles when determining the current Fair Market Value. We have no financial interest in the property being appraised because we are not affiliated with any venue that is sells personal property for a profit. This allows us to value the property in line with the current market and maintain an arm’s length relationship with objects we value.
Accredited Appraisal Reports
We write our non-cash charitable contribution appraisal reports according to the rules and guidelines of the Uniform Standards of Professional Appraisal Practices (USPAP) set by the Appraisal Foundation, which is based in Washington D.C. Erin Fossum is an Accredited Member of the International Society of Appraisers (ISA) and follows the report writing guidelines and ethics that are imperative to writing IRS-quality appraisal reports. Our appraisal reports are accepted and respected by federal and state government agencies and courts of law. We have conducted hundreds of estate tax appraisals that have been submitted to the IRS and have never had a report questioned.
Avoiding an Audit when Claiming a Large Donation or Gift Tax Deduction
Every year the IRS Art Advisory Panel reviews hundreds of appraisals related to estates and gifts. In 2017, the panel recommended adjustments upwards of $28 million in aggregate value. Estate tax appraisals can be rejected or questioned by the IRS if they are not conducted by a qualified, professional appraiser. This is one of the many reasons it is critical that you do your research and hire an appraiser who is an expert in the objects in question and who is well trained and educated in appraisal methodology.
Serving Museums, Private Collectors, Businesses, and Organizations
McAllister/Fossum Appraisal Services has conducted appraisals for clients who have donated to many institutions, including the following:
- Alaska State Museums
- Bainbridge Island Museum of Art
- Crocker Art Museum, Sacramento
- Frye Art Museum
- Hallie Ford Museum, Willamette University
- Henry Art Gallery
- Jundt Art Museum, Gonzaga University
- M.H. de Young Memorial Museum, San Francisco
- Maryhill Museum of Art
- Museum of Modern Art, New York
- Museum of Northwest Art
- National Nordic Museum
- Portland Art Museum
- Seattle Art Museum
- Seattle University
- Tacoma Art Museum
- University of Washington
- Western Washington University
- Whatcom Museum