More discussion about IRS tax appraisals

[Mark K]

What I am saying is: Is it ok for the property owner and intended users are different people.

You can have as many intended users as you want or are needed. Generally it best to limit the number of intended users for liability purposes. OTOH, you're not going to protect yourself from the IRS by claiming they're not an intended user if you make an error. If you know the report will be submitted to them and they're going to use it, just say so up front.

 

[CCAAMO]

They are determined after consultation with the Client, not unilaterally by the appraiser. Typically the fewer intended users the better.

 

[BRCJR]

Maybe some of this information will be helpful:

26 CFR § 1.170A-17 - Qualified appraisal and qualified appraiser.

www.law.cornell.edu

https://www.appraisalcolorado.com/irs-publication-51-real-estate-valuation/

Publication 561 (02/2024), Determining the Value of Donated Property | Internal Revenue Service

www.irs.gov

 

[Terrel L. Shields]

This applies to all gifting...but not to simple bump up for inheritance. The IRS is not an "intended user" for those. However, it can be an intended user for gifting. And this statement belongs in every appraisal that is for gifting.

"The purpose of the appraisal is to estimate the fair market value as defined by the IRS §1.170S-1(c)(2) of the subject property, as defined in this report, on behalf of the referenced client as the intended user of this report. The intended use of the appraisal is to assist the client, as the intended user of this report, in evaluating the subject property."​

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This appraisal was prepared for income tax purposes.​

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I understand that my appraisal will be used in connection with a return or claim for refund. I also understand that if a substantial or gross valuation misstatement of the value of the property claimed on the return or claim for refund results from my appraisal, I may be subject to a penalty under section 6695A of the Internal Revenue Code, as well as other applicable penalties. I affirm that I have not been barred from presenting evidence or testimony before the Department of the Treasury or the Internal Revenue Service pursuant to 31 U. S. C. section 330(c).​

 

[David S]

This applies to all gifting...but not to simple bump up for inheritance. The IRS is not an "intended user" for those. However, it can be an intended user for gifting. And this statement belongs in every appraisal that is for gifting.

"The purpose of the appraisal is to estimate the fair market value as defined by the IRS §1.170S-1(c)(2) of the subject property, as defined in this report, on behalf of the referenced client as the intended user of this report. The intended use of the appraisal is to assist the client, as the intended user of this report, in evaluating the subject property."​

​

This appraisal was prepared for income tax purposes.​

​

I understand that my appraisal will be used in connection with a return or claim for refund. I also understand that if a substantial or gross valuation misstatement of the value of the property claimed on the return or claim for refund results from my appraisal, I may be subject to a penalty under section 6695A of the Internal Revenue Code, as well as other applicable penalties. I affirm that I have not been barred from presenting evidence or testimony before the Department of the Treasury or the Internal Revenue Service pursuant to 31 U. S. C. section 330(c).​

Thanks! Since this is a retrospective appraisal report, I can use future sales comps after effective date, right? How far future can be? If the effective date is 07/01, can I use the late Sept comp? That comp is on the same street, same model, similar condition with about 5% lower price thought.

 

[Terrel L. Shields]

I can use future sales comps after effective date, right?

I would use sales BEFORE the date of death. The IRS is rather loose about this but most CPAs will claim the sales MUST BE prior to the DOD.

 

[David S]

I would use sales BEFORE the date of death. The IRS is rather loose about this but most CPAs will claim the sales MUST BE prior to the DOD.

This is not for estate tax. It is for gift tax. The parents still live in that house now.

 

[Terrel L. Shields]

The parents still live in that house now.

Use sales prior to the date of gifting

 

[sputnam]

Thanks! Since this is a retrospective appraisal report, I can use future sales comps after effective date, right? How far future can be? If the effective date is 07/01, can I use the late Sept comp? That comp is on the same street, same model, similar condition with about 5% lower price thought.

If it is an appraisal that is not intended for use in a lending tranaction, you can use sales that closed both before and after the effective date of the appraisal. The requirement that comparable sales be closed as of the date of the appraisal is a lending requirement. As for what time frame is appropriate, it depends on how the market has changed. A sale that closed one day after the effective date may be a good comparable. A sale that closed 2 years after may not be. Market to market adjustments may be needed... just as they sometimes are when the sale closed before the effective date.

 

[Functional Obs]

Thanks! Since this is a retrospective appraisal report, I can use future sales comps after effective date, right? How far future can be? If the effective date is 07/01, can I use the late Sept comp? That comp is on the same street, same model, similar condition with about 5% lower price thought.

I would advise against doing that. If a sale that took place after the effective date were actively listed prior to the effective date, then, sure, you could talk about it and perhaps grid it as a Comp 6, but by and large a reviewer would like to see the heavily weighted and upfront comps be completed sales from before the retrospective effective date. I would also recommend having someone else proofread all your reports for a little while.