The IRS requires that values of charitable donations of illiquid assets such as interests in private businesses or family investment entities be substantiated by independent, qualified appraisers. ABA professionals have prepared hundreds of such appraisals for this and other tax-related uses and have successfully answered challenges from the IRS. Our approach to these valuations includes these steps:
- Develop appraisal reports which properly support the value-driving decisions and the size of all discounts taken.
- Prepare appraisals as of the date on which the donation was made (valuations for different purposes, even as of the same date, can legitimately be substantially different because they have different assumptions).
- Support the size of the appropriate discount based on a reasonable assessment of the facts and circumstances.