Giving highly-appreciated assets to a public charity is a great way for your donors to support your mission. But time and again, we are reminded of the critical importance of following the IRS’s rules for documenting these gifts and securing the charitable deduction when those gifts take the form of highly-appreciated, non-marketable assets such as real estate, closely-held stock, and artwork, all of which are sometimes referred to as “alternative assets.”
Many planned giving professionals are still talking about the news of a Tax Court decision late last year to disallow a $600,000 charitable tax deduction because the taxpayer failed to secure a proper appraisal. Filing a proper Form 8283 seems like a no-brainer because it is mentioned constantly in charitable giving literature. Unfortunately, some taxpayers are still not getting the message. That was the case with a gift of artwork in Heinrich C. Schweizer v. Commissioner, a cautionary tale of what can go wrong–and how expensive it can be–when a donor (in this case, a donor who even worked at Sotheby’s), fails to follow the tax rules and obtain a qualified appraisal.
If your organization is interested in learning more about gifts of alternative assets, please reach out to the Winona Community Foundation. We offer a variety of funds, including an endowment or reserve fund, that can help you ensure your donor’s gift of an alternative asset is properly documented and reported so that the donor can benefit from a tax deduction as well as from the satisfaction of knowing that your organization’s mission is stronger thanks to the gift.
