Definition
A Tax Appraisal is a professional valuation prepared specifically to meet Internal Revenue Service requirements for tax-related purposes. These appraisals must follow IRS guidelines, be conducted by qualified appraisers, and provide sufficient documentation to substantiate reported values on tax returns.
Significance in Alternative Asset Valuation
Tax appraisals serve several critical functions:
- Estate tax returns: Date-of-death valuations for Form 706
- Gift tax returns: Fair market value for Form 709 gift reporting
- Charitable donations: Qualified appraisals for Form 8283
- Cost basis establishment: Documentation for future capital gains calculations
The IRS maintains specific requirements for tax appraisals:
- Conducted by qualified appraisers with relevant credentials and experience
- Prepared no earlier than 60 days before the donation (for charitable gifts)
- Include specific information about the appraiser, methodology, and comparable sales
- Signed and dated with appraiser’s declaration
For alternative assets, the IRS Art Advisory Panel reviews appraisals of art valued at $50,000 or more, making defensible methodology and market evidence essential.
How Impossival Approaches This
We provide valuations that meet IRS documentation standards, including comprehensive market analysis, comparable sales data, and methodology explanations. Our reports are designed to withstand potential IRS scrutiny.
Related Concepts
• Qualified Appraisal - IRS-defined appraisal standards • Fair Market Value - Standard of value for tax purposes • Estate Tax - Primary application for tax appraisals • IRS Form 8283 - Form requiring qualified appraisal attachment