IRS Publication 561 — Determining the Value of Donated Property
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“Appraiser penalties. An appraiser who prepares an incorrect appraisal may have to pay a penalty if the appraiser knows, or reasonably should have known, the appraisal would be used in connection with a return or claim for re- fund and the appraisal resulted in: 1.”
There are a number of problems in determining the FMV of donated property.
Unusual Market Conditions The sale price of the property itself in an arm’s-length transaction in an open market is often the best evidence of its value. When you rely on sales of comparable property, the sales must have been made in an open market. If those sales were made in a market that was artificially supported or stimulated so as not to be truly representative, the prices at which the sales were made will not indicate the FMV . For example, liquidation sale prices usually do not indicate the FMV . Also, sales of stock under unusual circumstances, such as sales of small lots, forced sales, and sales in a restricted market, may not represent the FMV .
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