What Is A Qualified Art Appraisal?
A comprehensive and detailed assessment of a piece of artwork by a professional art appraiser is termed a qualified art appraisal. Why an art appraisal? Because it helps determine the real worth of a work of art.
As per the Internal Revenue Service (IRS) there are other reasons too to carry out qualified art appraisals. They can be used to determine insurance coverage, estate planning, donations, and IRS tax deduction or other purposes.
Of note here is that only a qualified art appraiser can be involved in a qualified art appraisal. This is because they are the ones who are knowledgeable in art history and the marketplace. They also have the experience to accurately assess the value of a work of art. An art appraisal may include the details of the artist, the condition of the artwork, the medium, the provenance, the estimated market value, and the current market demand for the piece.
Why Is An Art Appraisal Necessary For IRS Tax Deduction
The need for a qualified art appraisal for tax purposes has become increasingly important, especially as per the current new IRS guidelines. The IRS requires the value of a donated artwork to be determined by a qualified appraiser. An informal appraisal is not accepted by the IRS. The appraised value of the artwork is then used to determine the amount of the tax deduction that can be claimed by the donor.
So, what exactly is an art appraisal? In short, it is an objective assessment of a work of art for the purpose of determining its monetary value. Appraisals are usually conducted by a professional appraiser or a licensed auction house.
As per the IRS, any artwork donated for tax purposes must be valued at fair market value and therefore requires an appraisal. The fair market value of an artwork is defined as the price at which the artwork would be exchanged between a willing buyer and a willing seller. The condition here is that neither party should be under any compulsion to buy or sell that piece of art.
When a qualified art appraisal is done for IRS tax deduction, an appraiser assesses the artwork and issues a fair market value. This value that is assigned is based on a variety of factors, including the condition of the artwork, its historical significance, its provenance, its size, and its medium. These details can be used to provide additional support for the appraised value of the artwork.
A qualified art appraisal also ensures that the value of the artwork is accurately determined so that the appropriate tax deduction can be rightfully claimed. An appraisal can also provide valuable information about the artwork. This information can then be used to support the appraised value.
Can The IRS Dispute An Art Appraisal?
Yes, the IRS has the authority to dispute an art appraisal.
Here are 3 reasons why the IRS can dispute an art appraisal:
- if it believes that the appraiser has not followed applicable standards of professional practice
- if the appraiser has not used sufficient data or other relevant information to support the opinion
- if the opinion does not have a reasonable basis
There are particular guidelines that the IRS has published for appraising art. The IRS has also set out guidelines for the qualifications of appraisers. These guidelines include the appraiser’s education, experience, and expertise in the type of art being appraised.
The IRS can also dispute an appraisal if it believes that the appraiser has not adequately considered the condition of the artwork. The IRS requires appraisers to include a description of the artwork’s condition, including any conservation or restoration work that has been done. The IRS may also take into account other factors, such as the artwork’s provenance, when determining its value.
Finally, the IRS can dispute an appraisal if it believes that the appraiser has incorrectly valued the artwork. The IRS may compare the appraised value to sales of similar artworks or to recent auction results. It can also use its own market data and research to challenge an appraisal.
Ultimately, the IRS has the authority to challenge an appraisal and require the taxpayer to provide further documentation. Taxpayers need to follow IRS tax deduction standards and should ensure they work only with qualified and experienced appraisers. Why? Because then they can retain complete records of the appraisal process in order to minimize the risk of an IRS dispute. If you too are looking for online art appraisers contact Appraisily for professionals.