Appraisal for Qualified Conservation Contribution Issue 2022

To: Senior Partner
From: [student name]
Date: July 28, 2019
Re: Appraisal for Qualified Conservation Contribution
Issue and Conclusion
This is in response to your request for a considered opinion regarding the disallowance of
the charitable deduction and the imposition of penalties on our client by the IRS. My opinion is
that the IRS can disallow the entire deduction if it establishes that necessary conditions for
making such a deduction claim were not met. Our client failed to meet a critical condition by
failing to attach an appraisal to the tax return.
Facts
The clients made a contribution of real property to her favorite charity in 2018. She
purchased the property in 2002 for $900,000 and, because it was personal use property, has
claimed no depreciation deductions. She had an appraisal of the property performed by a
professional who is accredited by the state agency that regulates appraisers in the client’s home
state, and who is authorized to practice before the IRS. The appraisal was conducted according
the generally-accepted standards for appraisals. The appraisal valued the property at $2,500,000.
On the 2018 return, the client claimed a deduction for the full amount because it was less than
any of the applicable limitations on charitable contribution deductions.
The client reported the property in Section A of the form 8283, rather than in Section B,
and so missed the requirement to attach an appraisal and did not attach it. Also, because the

property was personal use and not depreciated, the client did not think it was necessary to enter
the cost basis of the property in box g of Section A, and left that box blank.
Analysis
The client is entitled to claim a deduction on charitable contributions made to a
qualifying organization (Donald W. Nicholas et ux. v. Commissioner). Form 8232 is used to
report noncash charitable contributions. The form should be attached to the tax return if the total
deduction that is being claimed exceeds $500. The form has two sections: Section A and Section
B (I.R.S. Notice 2004-7). The first step that one should take before filling the form is to figure
out the amount of contribution deduction that one intends to claim. This will determine which
section of the form the tax payer should fill. Section A is filled by tax payers seeking to deduct
charitable contributions of property of $5,000 or less. If the value of a single item or group of
items of donated property exceeds $5,000, then the tax payer should fill Section B of Form 8232
and attach an appraisal to the form. The tax payer must also provide a signature from the
recipient charitable organization acknowledging the receipt of the donated property.
The client filled section A of for 8283 which essentially limits the maximum amount of
deduction that the client can claim to $5,000. The IRS’ justification for disallowing the deduction
however suggests that it is willing to overlook the error made by the client in filling Section A of
Form 8283 instead of Section B. Specifically, the IRS is proposing to disallow the deduction
because the client did not attach an appraisal (Herbert V. Kohler, Jr. et al. v. Commissioner). As
stated, a taxpayer is required to attach an appraisal when claiming a deduction of property whose
value exceeds $500,000. The IRS seems to have overlooked the error made by the client in
filling Section A as it has an expectation that an appraisal should have been attached.