Question: I need help. Is blockage necessary on a charitable
donation report? I have a client who is
donating a large number of prints by the same artist to a museum. I’m not sure
if I need to apply a blockage discount, but it also doesn’t make sense that the
client would receive a tax credit on the full amount. What do you think?
Answer: My rule of thumb is that if I would apply blockage for
the same property in an estate tax situation, then I would also apply blockage
in a charitable donation situation. Remember – fair market value is fair market
value whether you are writing an estate tax, gift tax, or charitable donation
appraisal report. The IRS has the same
definition for fair market value in each of these situations, thus the value
determined should be the same as well.
If it’s not fair for the client to pay taxes on a large group of
property, then it’s also not fair for the client to receive a large tax credit
on the same property.
- Meredith Meuwly, ISA
Director of Education
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