What is a “qualified appraisal”?

Many art professionals perform valuation services for their clients. However, when it comes to complex appraisal needs such as those for Internal Revenue Service functions (e.g.: charitable contribution, gift and estate tax) it is important that a “qualified appraiser” provides a “qualified appraisal report”.

All CollectorAnonymous reports are developed and written by me (Isabelle Weiss) an Accredited Appraiser of Fine and Decorative and accredited member of the International Society of Appraisers. Meeting both the ISA Appraisal Writing Standards and Uniform Standards of Professional Appraisal Practice (USPAP), I meticulously develop and write “qualified appraisal” reports with the utmost due diligence.

What is a “qualified appraisal”?

The INTERNAL REVENUE SERVICE defines a “Qualified Appraisal” in IRS Publication 561 (01/2023), Determining Value, stating:

“A qualified appraisal is an appraisal document that meets the following requirements.

• Is made, signed, and dated by a qualified appraiser (defined later) in accordance with generally accepted appraisal standards.

• Meets the relevant requirements of Regulations section 1.170A-17(a).

• Is signed by the qualified appraiser and dated no earlier than 60 days before the date of the contribution and no later than the due date, including extensions, of the return on which the deduction for the contribution is first claimed. For an appraisal report dated before the date of the contribution, the valuation effective date must be no earlier than 60 days before the date of the contribution and no later than the date of the contribution. For an appraisal report dated on or after the date of the contribution, the valuation effective date must be the date of the contribution.

• Does not involve a prohibited appraisal fee.”

  [Source: IRS.GOV]

Pub. 561 (01/2023) further outlines the required information to be included in a “Qualified Appraisal” as:

“A qualified appraisal must include the following information.

1. A description of the property in sufficient detail for a person who is not generally familiar with the type of property to determine that the property appraised is the property that was (or will be) contributed.

2. The physical condition of any tangible personal property or real property.

3. The date (or expected date) of contribution (valuation effective date).

4. The terms of any agreement or understanding entered into (or expected to be entered into) by or on behalf of the donor and donee that relates to the use, sale, or other disposition of the donated property, including, for example, the terms of any agreement or understanding that:

   1. Temporarily or permanently restricts a donee's right to use or dispose of the donated property;

   2. Earmarks donated property for a particular use; or

   3. Reserves to, or confers upon, anyone (other than a donee organization or an organization participating with a donee organization in cooperative fundraising) any right to the income from the donated property or to the possession of the property, including the right to vote donated securities, to acquire the property by purchase or otherwise, or to designate the person having the income, possession, or right to acquire the property.

5. The name, address, and taxpayer identification number (TIN) of the qualified appraiser and, if the appraiser is a partner, an employee, or an independent contractor engaged by a person other than the donor, the name, address, and taxpayer identification number of the partnership or the person who employs or engages the appraiser.

6. The qualifications of the qualified appraiser who signs the appraisal to value the type of property being valued, including the appraiser's background, experience, education, and any membership in professional appraisal associations.

7. A statement that the appraisal was prepared for income tax purposes.

8. The declaration required by Regulations section 1.170A-17(3)(iv).

9. The appraised FMV on the date (or expected date) of contribution.

10. The method of valuation used to determine FMV, such as the sales comparison approach, cost approach, or income approach.

11. The specific basis for the valuation, such as any specific comparable sales transaction.”

Pub. 561 (01/2023) further specifies the information required for Art objects:

“The following are examples of information that should be included in a description of donated property. These examples are for art objects. A similar detailed breakdown should be given for other property. Appraisals of art objects—paintings in particular—should include all of the following.

1. A complete description of the object, indicating the:

   1. Size,

   2. Subject matter,

   3. Medium,

   4. Name of the artist (or culture), and

   5. Approximate date created.

2. The cost, date, and manner of acquisition.

3. A history of the item, including proof of authenticity.

4. A professional quality image of the object.

5. The facts on which the appraisal was based, such as:

   1. Sales or analyses of similar works by the artist, particularly on or around the valuation date;

   2. A record of any exhibitions at which the specific art object had been displayed;

   3. The economic state of the art market at the time of valuation, particularly with respect to the specific property; and

   4. The standing of the artist in their profession and in the particular school or time period.”

As a qualified appraiser, I stay current with USPAP by completing the National Update Course every two years. Additionally, I complete a range of courses and seminars each year to stay up-to-date on methodology, the latest tax and legal issues related to the appraisal field and, of course, to increase my subject matter knowledge across a variety of fine and decorative art genres.

Working with a qualified appraiser, you know you are getting the most credible report designed to meet your specific needs.

What makes me a “qualified appraiser”?