NAD Planned Giving and Trust Services Certification Course

NAD Planned Giving and Trust Services Certification Course Fiduciary Accounting #2

Learning Outcomes: • Differentiate between a qualified and nonqualified appraiser • Know when to complete IRS Form 8283 and when to file Form 8282 • Be familiar with IRS requirements for charity gift substantiation • Understand IRS rules for donor record retention

What is a “Qualified Appraisal”? • “An appraisal performed by a qualified appraiser” • The appraiser cannot be related to any person or transaction involving the property

Characteristics of a Qualified Appraiser: • Markets themselves as an appraiser • Earned a certificate or license from a professional organization; demonstrates education and experience • Has not been prohibited from practicing by the IRS

Characteristics of a Qualified Appraiser • Does not establish the appraisal fee as a percentage of appraised value • Knows that making an intentionally false statement will result in a penalty • Has not been excluded by Treasury regulations from serving as appraiser 5

Real Estate Appraiser Requirements: • Licensed or certified by proper state agency • Has designations for residential real estate and/or commercial real estate 6

Non-Real Estate Appraiser Requirements: • Completed college or professional-level courses • Have two years experience buying, selling, or valuing the type of gifted property • Thoroughly describe in their appraisal their education and qualifying experience 7

When do I need a Qualified Appraisal? • For non-cash gifts • Where the charitable deduction claimed exceeds $5, 000 • For closely held stock • Where the charitable deduction claimed exceeds $10, 000

Statements Required in a Qualified Appraisal • Description of donated item • Date of Appraisal • Date or expected date of gift • FMV of donated item on gift date • Basis for FMV • Description of any agreement or understanding affecting use of item

Statements Required in a Qualified Appraisal • Appraisal was done for federal income tax purposes • Description of the fee arrangement (can’t be a percentage of the appraised value) • Appraiser’s name, address, and tax ID #

Statements Required in a Qualified Appraisal • Listing of appraiser’s • Education • Background • Training • Experience • Memberships in professional appraiser org

IRS Form 8283 What is it and when is it used? • An informational form • About non-cash contributions • When total deduction between $500 and $5, 000 • Used by donors

Form 8283 Use of Section A • Non-cash gifts • Between $500 and $5, 000 • Do NOT require a qualified appraisal • Gifts of publicly traded securities • Regardless of value

Form 8283 Use of Section B • Non-cash gifts exceeding $5, 000 per item or group • Closely-held stock for $10, 000 • Require a qualified appraisal

Form 8283 Use of Section B • Taxpayer/appraiser completes Part I • Donor completes Part II • Appraiser completes Part III • Charitable donee completes and signs Part IV

IRS Form 8282 - What is it and when is it used? • Commonly known as the “tattletale” form • Used to report information about the disposition of 8283 property

Why is Form 8282 called the “tattletale” form? • The charity tells on themselves to the IRS by filing Form 8282 • The charity tells on themselves to the original donor by giving them a copy of Form 8282

IRS Form 8282 Penalties If charities fail to file a complete and accurate 8282 in a timely manner, they may be subject to a penalty

Substantiation Rules for Charitable Contributions • Cash gifts of any amount • Bank record or receipt from charity • Gifts of $250 or more • Receipt or letter from charity (Cancelled check doesn’t suffice)

Substantiation Rules for Charitable Contributions • CRAT or CRUT • No receipt from the charity • Form 8283 for non-cash property required

Substantiation Rules for Charitable Contributions • Pooled Income Fund and CGA • Receipt or receipt letter required • Indicate value transferred • Indicate the value of the charitable interest • Copy of the charitable contribution calculation form included with receipt

Gift Substantiation Rules for Donors: • Cash contributions < $250 • Cancelled check or account statement showing • Check number, Posting date, Amount, To whom check was payable • Electronic fund transfer statement showing • Amount, Posting date, Donee • Credit card statement showing • Amount, Transaction date, Donee Organization • Receipt from charitable Organization showing • Amount, Contribution date, Organization’s name

Donor Gift Substantiation Rules: • Cash contributions $250 or more • Must obtain receipt or letter from organization • If payroll deductions used, keep pay stub, W-2 • Pledge card from charity indicating no goods or services were exchanged

Donor Gift Substantiation Rules: • Non-cash < than $250 • Must obtain a receipt from charity showing • Name, Date, Location of gift, reasonable description • Must keep • Reliable written records of FMV of property as of the date of contribution & how FMV was figured • Cost or other basis if FMV reduced by appreciation • Amount claimed as deduction • Terms of any conditions attached to the gift

Donor Gift Substantiation Rules: • If value between $250 and $500 • MUST obtain gift acknowledgement from charity and keep all records in previous slide • Acknowledgement must • be written • describe property, disclose whether goods or services were provided and provide a good faith estimate of the value of those goods or services • received by donor prior to filing tax return

Donor Gift Substantiation Rules: • If value between $500 and $5, 000 • Must maintain a written record including information from previous slide • Plus the manner, date of acquisition, and cost basis • If value exceeds $5, 000 • Must retain written records already described • And obtain a qualified appraisal

Charity Gift Substantiation Rules: • Provide written receipt to donors that include: • Name of Organization • Amount of cash contribution • Description (not value) of non-cash contribution • Statement that no goods or services were provided in exchange for gift • Donor’s SSN or tax ID number not required

Charity Gift Substantiation Rules: • If good/services received in exchange and > $75 • A written disclosure to the donor is required • It informs the donor that the deductible portion is only that amount that exceeds the value of the good/services received • It provides good faith estimate of the fair value of goods/services • * Another name for this is Quid Pro Quo contribution

Written Disclosure Requirement Exceptions: • When value of goods/services is • Insusbstantial, token, or de minimus value • When no donative or gift intent in transaction • Such as a purchase from a charity’s gift shop • When donor receives intangible religious benefits • Organization organized exclusively for religious purposes

Gift Substantiation Requirements Exclusions: • Items that are considered inconsequential or considered token benefits • In these cases, the entire amount paid to charity is deductible

Suggested Resources 1. NAD PGTS Manual Chapter 23 2. https: //www. irs. gov/pub/irs-pdf/i 8283. pdf 3. https: //www. irs. gov/pub/irs-pdf/f 8282. pdf

Questions?