CPA Committee Comments on Appraisal Compliance Guidance for Charitable Contributions

Thank you,

 

 

Jennifer Ringleb, CPA

 

Technical Reviewer

 

Texas Society of CPA's;

 

www.tscpa.org

 

Phone: 972-687-8592 or

 

800-428-0272 ext. 292

 

Fax: 972-687-8575

 

jringleb@tscpa.net

 

Re: Notice 2006-96 Guidance Regarding Appraisal Requirements for Noncash Charitable Contributions

 

Page 2; Section 2, Third Paragraph

Section 170(f)(11)(E)(ii) provides that the term "qualified appraisal" means an appraisal that is (1) treated as a qualified appraisal under regulations or other guidance prescribed by the Secretary, and (2) conducted by a qualified appraiser in accordance with generally accepted appraisal standards, as defined in Section 3(.02)(2), and any regulation or other guidance prescribed by the Secretary.

Page 4; Section 3 (.02)(2)

(2) Generally accepted appraisal standards. An appraisal will be treated as having been conducted in accordance with generally accepted appraisal standards within the meaning of § 170(f)(11)(E)(i)(ll) if, for example, the appraisal is consistent with the substance and principles of the Uniform Standards of Professional Appraisal Practice (USPAP), as developed by the appraisal Standards Board of the Appraisal Foundation, if applicable. Additional information is available at http://www.appraisalfoundation.org.

When USPAP is not applicable to the property being appraised, an appraisal will be treated as having been conducted in accordance with generally accepted appraisal standards if the appraisal is consistent with the published appraisal standards of the recognized professional appraisal credentialing organization,

 

Page 2; Section 2, Last Paragraph of the Page

Section 170(f)(11)(E)(ii) provides that the term "qualified appraiser" means an individual who (1) has earned an appraisal designation from a recognized professional appraiser organization or has otherwise met minimum education and experience requirements set forth in regulations prescribed by the Secretary, (2) regularly performs appraisals for which the individual receives compensation, and (3) meets such other requirements as may be prescribed by the Secretary in regulations or other guidance. Section 170(f)(11)(E)(iii) further provides that an individual will not be treated as a qualified appraiser unless that individual (1) demonstrates verifiable education and experience in valuing the type of property (e.g., real property, tangible personal property, or intangible property such as securities) subject to the appraisal, and (2) has not been prohibited from practicing before the Internal Revenue Service by the Secretary under § 330© of title 31 of the United States code at any time during the 3-year period ending on the date of the appraisal.

 

1) Competence to perform professional services involves both the technical qualifications of the certificate or registration holder and the certificate or registration holder's staff and the ability to supervise and evaluate the quality of the work being performed.

2) The certificate or registration holder may have the knowledge required to complete the professional services with competence prior to performance. In some cases, however, additional research or consultation with others may be necessary during the performance of the professional services. If a certificate or registration holder is unable to gain sufficient competence through these means, the certificate or registration holder shall suggest to the client the engagement of someone competent to perform the needed professional service, either independently or as an associate.

Consequently, we recommend that Page 6 .03 (3)(b)(ii)(B) as currently stated:

.03 (3)(b)(ii)(B) obtained at least two years of experience in the trade or business of buying, coiling, or valuing the type of property being valued, and

be replaced by the following statement:

.03 (3)(b)(ii)(B) obtained sufficient competence to complete the appraisal by nature of education, training or work experience, and

And that Page 6 .03 (3)(b)(ii)(C) also be modified accordingly:

.03 (3)(b)(ii)(C) fully describe in the appraisal the appraiser's education, training and experience that qualify the appraiser to value the type of property being valued.

Sincerely,

 

 

Paul French, CPA/ABV, CVA, BVAL,

 

CFFA

 

Chair, Business Valuations,

 

Forensic and Litigation Services

 

Committee

 

Texas Society of Certified Public

 

Accountants