End of Year Charitable Donation Appraisals

 The months of November and December for a personal property appraiser are much like the months of March and April for a CPA in terms of last minute business.  Many appraisers find themselves under deadlines with clients needing charitable donation appraisals for year-end tax deductions. Taxpayers can be suddenly scrambling to donate outdoor sculptures to public institutions, paintings to museums, rare books to libraries and antiques to historic homes.  If you are among those taxpayers who wish to donate an item or items before December 31 of this year, here are a few things to consider.

A taxpayer must obtain an appraisal if they are claiming more than $5,000 for a single item or for a group of similar items that amount to $5,000. If the donated amount for an item or group of similar items exceeds $20,000, a written appraisal must accompany the tax return along with a completed US tax form 8283. In addition, the appraiser must sign the 8283, part III B, under the declaration as well as fill out appropriate data.

Appraisals submitted to the IRS must be performed by a qualified appraiser.  An appraiser is considered qualified by the IRS when they have earned an accreditation designation within their subject field from one of the recognized professional personal property appraisal organizations or have met the minimum requirements set forth by the Appraisal Qualification Board (AQB).  Minimum requirements for a qualified appraiser include:

• Testing and passing a comprehensive examination after 120 hours of appraisal methodology and theory courses which include an initial 15 hour USPAP (Uniform Standards of Professional Appraisal Practices) course followed by a 7 hour course every 2 years.
• 1,800 hours in personal property appraisal development and writing experience of which 900 hours should be in the appraiser’s specialty area OR 4,500 hours of market experience.
• 70 hours during a 5 year period of continued education in personal property appraising and product knowledge for credential renewal.

An appraiser must have education, product knowledge and work experience in the area they are appraising with a charitable donation. They must be able to clearly demonstrate it in a professional profile provided within the appraisal and with a “Qualified Appraiser’s Statement” provided within the cover document portion of the appraisal. Taxpayer’s should review an appraiser’s qualifications before hiring and compare several appraisers before making a final choice of which one to choose in order to make sure they are using the most qualified appraiser for the assignment.

In addition to the above requirements for minimum education and experience, the IRS requires a charitable donation appraiser to be one whom regularly preforms appraisals and is paid for their services. They do not accept appraisals from dealers or auction houses which occasionally preform appraisals or who give free appraisals. The appraiser chosen can’t have been prohibited by the IRS for any reason for preforming charitable donations, nor can they be a party to the transaction, employed by one of the involved parties or a family member of any of the involved parties.

The timing of your appraisal and hiring of your appraiser is important. The appraisal should not be done earlier than 60 days before the contribution. This contribution date, the date the transfer of the property actually takes place, is the effective date of the valuation.  The taxpayer should leave plenty of time for all parties to complete their portion of the transaction.   An appraiser needs adequate time to thoroughly inspect and photograph a donated item, research comparable information for fair market value, prepare a written report with images and have all IRS forms completed and signed.  If a taxpayer is deciding upon a December 31 donation, beginning in November is not too early to begin working with an appraiser. The appraisal can be done after the contribution, but often there is a problem with inspection details and knowing the condition of the item at time of contribution.

As with any other hiring situation, be sure to check references and the background of your appraiser. Hiring the most qualified appraiser for your donated property will make the process enjoyable. The Dallas Fort Worth area has an abundance of qualified personal property appraisers in all fields of collectibles whom have been trained and tested in appraisal methodology and theory with the International Society of Appraisers. ISA is one of the top three professional appraisal organizations in North America and Canada.  Taxpayers are welcome to visit http://www.isaappraisers.org for a complete listing of qualified appraisers in their area to help with their charitable donation appraisal needs.

Fette Chinese Rugs

Rug weaving in Tiensin and Peking, China grew into a large industry in the 1920s and 1930s.  Prior to this time, there was very little variety in design and color of Chinese rugs.  This lack of variety changed when Mrs. Helen Fette, her hsuband Franklin and their two children arrived in Peking in 1919.  Mr. Fette, a Wellesley College professor, accepted a two year contract to teach the sister college, Yenching.  Mr. Fette completed his contract but was only paid for 6 months. 

Helen Fette, a Vassar graduate, secured a job at the Methodist Mission School where the family resided until 1922.  After selling several rugs for the Chinese famine relief of 1920-21, she decided to explore the possibility of going into the rug production business. 

Mrs. Fette visited many weaving facilities in search of a Chinese business partner until she found Mr. Li whom she considered trustworthy.  The business partnership lasted until 1948 and a lifelong friendship  established between Helen Fette and Mr. Li Meng Shu.  

The Fetti-Li company employed over 2500 employees at the peak of their production in the 1930s.   Mr. Fette served as secretary-treasurer.   Mrs. Fette served as president for 20 years and implemented her talents for organization, judgment, artistry and human kindness.   Materials used in their rugs were manufactured in China and they built comfortable living quarters for their employees that included a health clinic, recreational areas, classrooms, dining halls, a library and a bank.  In addition to training the rug weaving apprentices, the classrooms provided education to at least the 5^th grade.  All of these innovations were startling from the Chinese perspective. 

When the Japanese attacked Shanghai in 1937, the rug business suffered many disruptions.  With attack on Pearl Harbor in 1941, the Fette-Li factories closed for the duration of the war and were not able to be re-opened during the post-war period before the Communist take over.  In 1948, the Communists occupied Peking and the company was officially dissolved and both Mr. Li and Mrs. Fette left with their families.  

My grandfather, H. M. Amirkhan, Sr. sold Fette Chinese rugs in the 1920s and 30s.  He was also a pack rat!  Years ago, while cleaning out 75 years of accumulated paperwork, I came across a packet of photos from the Fette-Li company.  The photos were samples of designs available for purchase.  Five years ago, a customer brought in her Chinese rug for cleaning and repair.  I recognized the rug as being a Fette and found the black and white photograph taken so many years ago that matched her design.  I gave her a copy of the photograph for her records and a short history of the Fette-Li company.  Below are photographs of her rug and the sample photo.