The recently passed Pension Protection Act of 2006 requires individuals and companies making non-cash contributions (such as real estate) to charitable organizations to attach a valuation report performed by an appraiser to an estate or gift tax return. The law also provides for new sanctions (including penalties) for appraisers for valuation misstatements in tax matters, giving the IRS new ammunition to discipline appraisers and taxpayers who do not provide support valuation opinions when making non-cash contributions to charities.

Essentially, this means that it will be easier for the IRS to identify taxpayers who try to fraudulently inflate the value of a contribution to reduce their tax liability.

We support the concept of making cash and non-cash donations to charities both to support the mission of the receiving organization and as part of your tax strategy. But the method by which you make the contribution and calculate the value should be both legal and ethical.

For more information on this issue, check out the IRS web site at: http://www.irs.gov/charities/contributors/index.html
To find a CPA/Accredited Business Valuation professional, visit:
http://www.aicpa.org/credentialsrefweb/ABVCredentialSearchPage.aspx

Jackie
Chief Blogger
Wealth Intelligence Academy