INSURANCE COVERAGE - DONATION - RESALE - LOSS - ESTATE
There are various objectives when writing an appraisal. The scope of work is determined by the client's objective and use.
1. INSURANCE COVERAGE
Appraisals are an important part of owning art, and for protecting your art investment. Art values can change quickly and insurance coverage should be current - approximately every two years is advisable- to insure proper coverage in the event of damage or loss.
All insurance claims will require two things:
a. Proof item existed
b. Value of item at time of loss
An appraiser is required to retain the report and work file for a period of five years.
2. CHARITABLE DONATION
Appraisals that have the intended use of charitable donation must meet stringent criteria of the Internal Revenue Service.
The IRS mandates that any charitable contribution of an item with a fair market value of more than $5,000.00 must have a certified appraisal by a "qualified appraiser" attached to your return, as well as the submission of IRS form 8283.
For Tax purposes, the IRS only accepts the Fair Market Value of an artwork as a basis from which to begin your calculations - no matter what the circumstance of the deduction or payment may be.
According to the IRS, definition of Fair Market Value is "The price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having a reseasonable knowledge of relevant facts."
Appraisal reports for the IRS are the most complex type of report and require a reasoned justification by the appraiser of the Fair Market Value of the item(s) donated. Items with a FMV over $20,000.00 should be submitted with a professional 8 x 10 photograph or 4 x 5 transparency.
3. RESALE VALUE
What is my art worth?
An appraisal can also be used to inform a client as to what their artwork is worth (Fair Market Value) before making it available for sale. This arms the client with an impartial, independent assessment of their property when going into the marketplace.
4. DAMAGE OR LOSS
In the event of damage or loss, an appraiser can provide valuation for the replacement cost of that property, or the cost to restore or repair the property to make the client "whole".
There are many situations when an appraisal of personal property is needed for estates: To provide FMV for estate tax, probate, trust inventory, equitable distribution and estate planning.
PROFESSIONAL OPINION OF VALUE
Professional Opinion of Value is an option for clients seeking a Fair Market Value (cash value) of a work or works, however this is not an appraisal.
All appraisals are prepared in compliance with the standards set forth by the Uniform Standards of Professional Appraisal Practice (USPAP) and the International Society of Appraisers (ISA). All donation appraisals meet the relevant requirements of Internal Revenue Regulation §1.170A-13 (c)3 and the requirements of IRS Revenue Procedures 66-49 and Publications 526 and 561.
All reports are confidential and are not released to any party without the express permission of the client.