For tax purposes, the most important requirement under the qualified appraisal rules is that the valuation be done by a qualified appraiser. The requirements are set out in Section 170 of the tax law and related regulations. A qualified appraiser is one who either has relevant credentials or enough experience. But how much experience is enough? A new case gives some guidance.

New case: In a Tax Court case involving a charitable contribution of shares in a closely held corporation, an investment banker did the valuation. He had no certifications from any professional appraiser organization and testified that had done valuations only “on a limited basis” just a year before the engagement. He also said that, at the time of the trial, he was performing business valuations for prospective clients “once or twice a year” (presumably gratis) to solicit their business. The court ruled that the investment banker was not a qualified appraiser, so the donors are not entitled to a charitable tax deduction.

There were other defects in the valuation report and other issues in the case, which is Hoensheid v. Comm’r (In re Estate of Hoensheid), T.C. Memo 2023-34, and a case digest and full opinion are available on the BVLaw platform.