AICPA Comments on Charitable Contribution Substantiation Prop. Regs.

By Alistair M. Nevius, J.D.

In August, the IRS issued proposed regulations on substantiation and reporting requirements for charitable contributions (REG-140029-07). (See News Notes, 39 The Tax Adviser 640 (October 2008).)

The Forensic and Valuation Services Executive Committee and the Tax Executive Committee of the AICPA have sent comments to Treasury on those proposed regulations’ provisions regarding appraisals and individuals performing appraisals.

The proposed regulations define the terms “generally accepted appraisal standards” and “qualified appraiser” for purposes of Sec. 170(f)(11)(E). Generally accepted appraisal standards are defined in Prop. Regs. Sec. 1.170A-17(a)(2) to mean the substance and principles of the Uniform Standards of Professional Appraisal Practice (USPAP), as developed by the Appraisal Standards Board of the Appraisal Foundation.

The AICPA recommends that the definition of generally accepted appraisal standards remain as it is in Notice 2006- 9, with no further definition, because in the notice the term covers more than just one appraisal standard. The AICPA’s concern is that reference to USPAP may result in undue focus on that particular standard to the exclusion of other appraisal standards of similar rigor and quality. If Treasury retains the reference to USPAP, the AICPA recommends that the language in the regulations be revised to state that USPAP is one example of generally accepted appraisal standards.

The proposed regulations define “qualified appraiser” to mean an individual with verifiable education and experience in valuing the relevant type of property for which the appraisal is performed. Prop. Regs. Sec. 1.170A-17(b)(2)(i) provides that an individual is treated as having the requisite education and experience in valuing the relevant property if, as of the date the individual signs the appraisal, the individual has successfully completed professional or college-level coursework in valuing the relevant type of property and has two or more years of experience in valuing the relevant type of property or has earned a recognized appraisal designation for the relevant type of property.

The AICPA recommends that Treasury clarify whether successful completion of professional or college-level coursework (i.e., training) should be obtained prior to the experience requirement or whether both components can be obtained contemporaneously. The AICPA also recommends that Treasury further define and clarify the “professional or college-level coursework” and “two or more years” of experience requirements.

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