There are some special reporting rules that the IRS requires for charitable gifts:
If the value of a gifted interest in closely held stock exceeds $10,000, a qualified appraisal report is required.
The appraisal report must be completed no earlier than 60 days prior to the gift and no later than the date the return is due (with extensions).
It is very important that business owners donate stock in their business before entering into a binding agreement to sell the company. Once a binding agreement is in place, a gift may be characterized by the Internal Revenue Service as an “anticipatory assignment of income”, which results in the gift being treated as a sale of stock, thereby resulting in a taxable capital gain on the appreciation of stock.
The appraisal must be completed by a ‘qualified appraiser’ in accordance with generally accepted appraisal standards. A ‘qualified appraiser’ meets the following requirements: 1) The individual has either earned an appraisal designation or has met certain minimum education and experience requirements, 2) The individual regularly prepares appraisals for which he or she is paid, 3) The individual demonstrates verifiable education and experience in valuing the type of property being appraised and 4) The individual has not been prohibited from practicing before the IRS.
[The report also must meet the relevant requirements of Regulations section 1.170A-13(c)(3) and Notice 2006-96. Notice 2006-96, 2006-46 I.R.B. 902, is available at www.irs.gov/irb/2006-46_IRB/ar13.html.]
The following link includes instructions from the IRS on completing Form 8283, Noncash Charitable Contributions. This form must be completed if the amount of deduction for all noncash gifts is more than $500. http://www.irs.ustreas.gov/pub/irs-pdf/i8283.pdf
