14.15 Form 8283 and Written Appraisal Requirements for Property Donations

You must attach Form 8283 to your Form 1040 for 2012 if you claim a total deduction of over $500 for all of your donations of property. The IRS may disallow your deduction if you fail to attach Form 8283. In Part I of Form 8283, you must identify the charity, describe the donated property, provide the value of the property on the date of the donation and indicate how you valued it (such as by appraisal, catalog for a collectible, or thrift shop value for clothing or household furniture). For each item valued at over $500, you also have to indicate how and when you acquired the property, and your cost or other basis.

If you are claiming a deduction exceeding $5,000 for an item, or for a group of similar items (such as paintings, buildings, coins, stamps, or books), you generally need a written appraisal from a qualified appraiser. The appraiser must sign a declaration in Part III of Section B of Form 8283 that he or she is unrelated to you and meets the other requirements for qualified appraisers. The appraisal must be made no earlier than 60 days before your donation, and you must receive it by the due date (including extensions) of the return on which you claim the deduction.

Failure to obtain a qualified appraisal can cost you a deduction even if the value you claim for the property on Form 8283 is a fair value. In one case, the Tax Court sided with the IRS in completely disallowing deductions for property worth about $18.5 million because the donor (a real estate broker and certified real estate appraiser) appraised the properties himself. The Tax Court, although sympathetic to the donor, held that even though the contributions were not overvalued on Form 8283, and may well have been undervalued, the deductions had to be completely disallowed because a timely appraisal from an independent qualified appraiser had not been obtained .

Caution

Charity Reports Transfer Within Three Years

If you reported a property donation exceeding $5,000 on Form 8283 and the charity sells or otherwise disposes of the property within three years after your gift, it must notify the IRS on Form 8282 and send you a copy. The sale might trigger the recapture of a deduction claimed for a contribution of tangible personal property exceeding $5,000 (14.6). Reporting on Form 8282 is not required by the charity for a particular item if in Part II, Section B, of Form 8283 you indicated that the appraised value of that item was not more than $500. Similar items such as a collection of books by the same author, stereo components, or place settings of silverware may be treated as one item. Reporting is also not required on Form 8282 for donated property that the organization uses or distributes without consideration, if this use furthers the organization’s tax-exempt function or purpose.

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You do not need an appraisal for a car, boat, or airplane if your deduction is limited to the gross proceeds from its sale (14.17), or for publicly traded securities, non-publicly-traded securities of $10,000 or less, intellectual property (14.6), or business inventory.

Whether or not a written appraisal is required for property valued at over $5,000, you must describe the property, value it, and provide your cost and other acquisition details on Form 8283. in Section B, Part 1.

The appraisal itself should be kept with your records and does not have to be attached to your return except in two situations: If you are claiming a deduction of $20,000 or more for art, you must attach a complete copy of the appraisal to Form 8283 and you may be asked by the IRS to submit a color photograph (8” × 10”) or a slide (4” × 5”) of the art. If the claimed deduction exceeds $500,000, the qualified appraisal must be attached to your return (assuming no exception to the appraisal requirement). See the Form 8283 instructions for further details on the appraisal requirements.

Donee acknowledgment.

For property donations exceeding $5,000, the donee organization must acknowledge the receipt of the property in Section B, Part IV of Form 8283. If the organization sells or otherwise disposes of the property within three years of the donation, it must file Form 8282 with the IRS and give you a copy.

Penalty for overvaluation.

You may be penalized for a substantial overvaluation of donated property (14.16).

Appraisal fees.

A fee paid to an appraiser is not considered a charitable deduction but is deductible as a “miscellaneous” expense subject to the 2% adjusted gross income floor (19.1).