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HEWLETT PACKARD SAYS INVENTORY SHOULD BE EXEMPTED FROM APPRAISAL REQUIREMENT.

SEP. 1, 1988

HEWLETT PACKARD SAYS INVENTORY SHOULD BE EXEMPTED FROM APPRAISAL REQUIREMENT.

DATED SEP. 1, 1988
DOCUMENT ATTRIBUTES
  • Authors
    Kostenbauder, Dan
  • Institutional Authors
    Hewlett Packard
  • Code Sections
  • Subject Area/Tax Topics
  • Index Terms
    qualified appraisal
    qualified appraiser
    charitable contribution
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 88-7496
  • Tax Analysts Electronic Citation
    88 TNT 184-23

 

=============== SUMMARY ===============

 

Dan Kostenbauder, tax counsel for Hewlett Packard, Palo Alto, Calif., has commented that inventory should be excepted from the qualified appraisal requirement in the proposed regulations under section 1.170A-13. Kostenbauder explains that Hewlett Packard has a program of donating equipment to U.S. colleges and universities, which has resulted in equipment grants of $40.6 million during the company's 1987 fiscal year, or over one percent of the firm's gross sales in the U.S. To require qualified appraisals for charitable contributions of inventory property would "significantly reduce the amount of equipment grants that HP would make," Kostenbauder writes.

Kostenbauder says that the appraisal requirement would provide minimal benefits to the IRS. He maintains that a significant percentage of inventory grants are made by C corporations subject to regular, ongoing IRS audits. With the additional information provided by the appraisal summary on Form 8283, IRS agents should be able to prevent any abuse. The penalties under sections 6659 and 6661 should provide added incentives for corporations to value donated inventory in good faith, he adds. Kostenbauder also raises the possibility that appraisers would have to have access to proprietary and highly confidential information on product costs and profit margins, which might lead to significant resistance within the company to making any grants at all.

Kostenbauder agrees that appraisals would be appropriate for in- kind contributions of noninventory property, even if donated by C corporations, since the value of such items "is subject to much greater subjectivity than the value of inventory."

DOCUMENT ATTRIBUTES
  • Authors
    Kostenbauder, Dan
  • Institutional Authors
    Hewlett Packard
  • Code Sections
  • Subject Area/Tax Topics
  • Index Terms
    qualified appraisal
    qualified appraiser
    charitable contribution
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 88-7496
  • Tax Analysts Electronic Citation
    88 TNT 184-23
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