Returns with Education Credits Accepted Mid-February

No matter how philanthropic you may feel, you must follow tax rules if you want to claim a deduction for your giving. That’s the lesson learned by one taxpayer who donated about 72% of the stock in his closely held corporation to charity. The corporation owned 2 apartment buildings, and he obtained appraisals of each property. However, the IRS denied his deduction of over $1 million because he never got an appraisal for the stock.

The Tax Court agreed with the IRS. The taxpayer attached the required Form 8283, Noncash Charitable Contributions, to his return, stating that the gift was for shares of common stock in the corporation that owned the buildings. Attached to the form were appraisals of those buildings. However, there was no appraisal of the stock. As the court said, “Not appraising what was actually donated is a big problem.” Thus, without a qualified appraisal, there was no tax deduction allowed.

Source: Estate of Harvey Evenchik , TC Memo 2013-34