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24 Apr

Business Appraisals for the IRS: Qualified Appraisers

Posted in Valuation dictionary on 24.04.09

The IRS first required that taxpayers use qualified appraisers under the Pension Protection Act of 2006 in relation to claiming charitable deductions. The definition of qualified appraiser has been incorporated into penalty rules as well.

A qualified appraiser is defined as an individual who has “verifiable education and experience in valuing the relevant type of property for which the appraisal is performed”[1]. In order to have the appropriate level of education and experience for a business appraisal, an appraiser must have completed business appraisal coursework with passing grades offered by a professional organization or college AND have two or more years experience in business appraisal. The Proposed IRS Regulations clarify that an appraiser who has received a recognized appraisal designation from a professional appraisal organization is deemed to have met the education and experience requirements. (See post “How do I find an appraiser?” April 20, 2009 for a list of the appraisal organizations.)

The Proposed IRS Regulations further identify people who are NOT qualified appraisers. In particular, an appraiser whose fee is based on the value of the business is not a qualified appraiser. The donor or the donee of the property being valued cannot prepare the appraisal either. Related parties to the donor or donee also fall into this group. Any individual who has been barred from practicing before the IRS with the three years before the appraisal date is not a qualified appraiser.

This is an overview of the rules for qualified appraisers. If you are valuing a business for IRS compliance purposes, you will want to make sure that the business appraiser you select is a qualified appraiser.

© 2009 Florida Business Valuation Group

[1] Internal Revenue Ruling 2008-40


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