The American Society of Appraisers (ASA) asked the Internal Revenue Service (IRS) for clarification following remarks made during ASA’s recent Personal Property conference in Mexico about “similar items” included in appraisal reports prepared for charitable contribution deductions, the ASA announced on its website.
The IRS responded to ASA’s clarification request regarding the application of the phrase “similar items” and its impact when preparing these appraisals with specific guideline information for ASA.
“Dissimilar items must be handled separately on separate Forms 8283 but can be in one appraisal report as long as they are in separate ‘chapters’ or ‘sections.’ Publication 561 (under the heading Deductions of More than $5,000 on page 9) explains what is meant by ‘similar items.’ It identifies examples of items specifically not considered ‘similar’ and separates these items by commas,” the IRS said.
“For example, china cannot be considered together with everyday kitchenware, and lithographs (such as etchings) cannot be considered together with paintings,” the IRS added. “When dealing with two or more items, where each item is below the $5,000 threshold and the items are not ‘similar,’ the taxpayer can submit Form 8283 without an appraisal performed to support the claimed deductions. Therefore, the term ‘aggregate’ does not apply to dissimilar items.”
Additionally, the IRS suggested when dealing with two or more items, where each item is above the $5,000 threshold and the items are not “similar,” the taxpayer must obtain an appraisal that includes the items above the threshold, and have the appraiser(s) sign a Form 8283 for each item.
However, the IRS noted, this can be done in a single appraisal report if the items are going to one donee on the same effective date (the date of title transfer).
“When dealing with two or more items, where each item is below the $5,000 threshold but are ‘similar’ to each other and, in the aggregate, exceed $5,000, an appraisal must be performed of the ‘similar’ items and the appraiser(s) must sign Form 8283 (and, in the case of multiple donees, separate 8283’s for each donee),” the IRS said. “An appraisal is needed; even when the items are going to separate donees, but the aggregate is over $5,000.”