On August 7, 2008, the IRS published proposed regulations generally implementing changes to the substantiation and reporting rules for charitable contributions resulting from the American Jobs Creation Act of 2004 and Pension Protection Act of 2006 (PPA). Among other things, the proposed regulations implement the recordkeeping requirements imposed by the PPA for all cash contributions and the new definitions of a qualified appraisal and qualified appraiser applicable to noncash contributions. Among the provisions of note:
- No deduction is allowed for for any contribution of a cash, check, or other monetary gift unless the donor maintains as a record of the contribution a bank record or written communication from the donee.
- Donors who make contributions of $250 or more but not more than $500 are required to obtain only a contemporaneous written acknowledgment ("CWA") and are not required to obtain any other written records.
- For claimed contributions of more than $500 but not more than $5,000, the donor must obtain a CWA and must file a completed Form 8283 (Section A) with the return on which the deduction is claimed.
- For claimed contributions of more than $5,000, in addition to a CWA, a qualified appraisal is generally required, and the donor must file a completed Form 8283 (Section A or B depending on the type of property contributed) with the return on which the deduction is claimed.
- For claimed contributions of more than $500,000, the donor must attach a qualified appraisal to the return.
- A qualified appraisal means an appraisal document prepared by a qualified appraiser in accordance with generally accepted appraisal standards (GAAS), which are the substance and principles of the Uniform Standards of Professional Appraisal Practice (USPAP).
- A qualified appraiser must be an individual with verifiable education and experience in valuing the relevant type of property for which the appraisal is performed, which generally requires successful completion of professional or college-level coursework in valuing the relevant type of property and two or more years of experience in valuing such type of property. The relevant type of property is determined by what is customary in the appraisal profession.
- No deduction is allowed for any contribution of clothing or a household item unless it is in good used condition or better; provided, however, that this rule does not apply to a contribution of a single item of clothing or a household item for which a donor claims a deduction of more than $500 if the donor submits a qualified appraisal with the return. If the donor claims a deduction of less than $250, the donor must obtain a receipt from the donee or maintain reliable written records of the contribution including a description of the condition of the item.
The IRS is accepting comments to the proposed rules through November 5, 2008.