Printer Friendly

Large charitable deduction ok when donor "substantially complied" with qualified appraisal rules.

In 1986 the Bonds donated two blimps to a charitable organization. An appraiser concluded their value was $60,000, which the Bonds claimed as a charitable deduction on their 1986 tax return.

Special substantiation regulations (regulations section 1.170A13) apply to charitable deductions in which donated property is claimed to be worth more than $5,000. The regulations require donors to

* Obtain a qualified appraisal for the donated item.

* Attach an appraisal summary to the return.

* Include certain information on the return. Further, the regulations require the donor to have received a qualified appraisal before the due date of the tax return on which the deduction is claimed.

The appraiser properly completed and signed the relevant parts of the appraisal summary on the Bonds' Form 8283, Noncash Charitable Contributions. The Bonds complied with most of the regulation's other requirements. However, the appraiser did not furnish the Bonds with a separate written appraisal, either before the due date of the 1986 tax return or afterward.

The IRS audited the Bonds' 1986 return and assessed a deficiency. In the Tax Court, the IRS claimed the charitable deduction should not be allowed because the Bonds did not obtain a qualified appraisal.

Result: For the Bonds. The regulatory requirements are procedural and not substantive. Therefore, the "doctrine of substantial compliance" applies. Since the Bonds did substantially comply with the regulations, they are entitled to the charitable deduction.

* Bond, 100 TC No. 4.
COPYRIGHT 1993 American Institute of CPA's
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

Article Details
Printer friendly Cite/link Email Feedback
Publication:Journal of Accountancy
Article Type:Brief Article
Date:Apr 1, 1993
Previous Article:Supreme Court: IRS wins S corporation limitations-period issue.
Next Article:Stock gifts and minority discounts.

Related Articles
Effects of the RRA on exempt organizations.
Giving percentage interests in art.
Appraisal requirement for charitable deduction.
Documenting charitable deductions.
Limits on individuals' charitable deductions.
Limits on individuals' charitable deductions.
IRS scrutiny of charitable conservation easements.
IRS approves donor-managed investment account technique.
Charitable gifts of partial and undivided interests.
Charitable deductions: are donors getting what they need?

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters