Avoid valuation ‘slip-ups’ when donating complex assets

Giving highly-appreciated assets to a fund at the Community Foundation or other public charity is a great way for your clients to support the charities they love. But make sure you and your clients are following the IRS’s rules for documenting these gifts and securing charitable deductions, especially when those gifts take the form of non-publicly traded assets.

Many attorneys, accountants, and financial advisors are still talking about the news of a Tax Court decision late last year in Heinrich C. Schweizer v. Commissioner to disallow a $600,000 charitable tax deduction because the taxpayer failed to properly document and report the appraisal. Filing a proper Form 8283 seems like a no-brainer because it is mentioned constantly in estate planning and charitable giving literature. Unfortunately, some taxpayers are still not getting the message. That case is a cautionary tale of what can go wrong and how expensive it can be when a taxpayer fails to follow the tax rules and properly report a qualified appraisal. In this case, the taxpayer even worked at Sotheby’s.

Please reach out to the Community Foundation when you are talking with clients about gifts of alternative assets. We will be happy to help you work with the client to ensure that a gift of an alternative asset to the Community Foundation is properly documented and reported. That way your client can benefit from a tax deduction, as well as from the satisfaction of knowing that the organization’s mission is stronger thanks to the gift.

In many cases, the Community Foundation can receive the gift into a client’s fund and help ensure that the proceeds are deployed to achieve the client’s charitable goals. We’re here to help, just let us know what you need.

The team at the Community Foundation is a resource and sounding board as you serve your philanthropic clients. We understand the charitable side of the equation and are happy to serve as a secondary source as you manage the primary relationship with your clients.

This newsletter is provided for informational purposes only. It is not intended as legal, accounting, or financial planning advice.