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GIVING WHEN IT ALREADY HURTS

October 16, 2002

The stock market’s doldrums (ok, disasters) of recent months cause a problem for taxpayers who typically make year-end charitable gifts of appreciated stock. The problem is that there may not be much appreciation at the moment.

The tax breaks for charitable gifts of appreciated stock – fair market value deductions and no tax on the appreciation – also apply to other property held for over one year; they are just harder to get. For gifts of property other than public stock that exceed $5,000, the taxpayer has to get a qualified appraisal to verify the property, and the appraiser has to sign Form 8283 for inclusion with the donor’s tax return.

Your appraiser has to meet certain conditions. The appraiser cannot be related to you or to the person from whom you purchased the property, for example, and the appraisal fee cannot be based on the value of the property. Without an appraisal, no deduction is allowed when the claimed deduction exceeds $5,000.

Note that the appraisal requirement applies to all non-cash donations other than public stock; this is true even if the property is something easily valued, like a life insurance policy.

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