Final rules govern adequate substantiation for charitable contributions

By Sally P. Schreiber, J.D.

The IRS published final regulations that implement changes made by the American Jobs Creation Act of 2004, P.L. 108-357, and the Pension Protection Act of 2006, P.L. 109-280, to the substantiation and reporting rules for charitable contributions under Sec. 170 (T.D. 9836). The final regulations set forth the substantiation requirements for contributions of more than $500 under Secs. 170(f)(11)(B) through (D); the new definitions of qualified appraisal and qualified appraiser applicable to noncash contributions under Sec. 170(f)(11)(E); substantiation requirements for contributions of clothing and household items under Sec. 170(f)(16); and recordkeeping requirements for all cash contributions under Sec. 170(f)(17).

Cash contributions

Regs. Sec. 1.170A-15 contains the substantiation rules for cash, check, or other monetary gifts, implementing the requirements of Sec. 170(f)(17). Under that section, no charitable contribution deduction is allowed for any monetary gift unless the donor maintains, as a record of the gift, a bank record or a written communication from the donee, showing the name of the donee, the date of the contribution, and the amount of the contribution. The regulations clarify that these rules supplement the substantiation rules in Sec. 170(f)(8), which require a contemporaneous written acknowledgment of contributions of $250 of more.

Donations of property

The IRS explained that additional substantiation requirements apply when donations involve property. For property under $250, the donor must obtain a receipt from the donee or keep reliable records. A donor who claims a noncash contribution of at least $250 but not more than $500 is required to obtain a contemporaneous written acknowledgment. For a donation of more than $500 but not more than $5,000, the donor must obtain a contemporaneous written acknowledgment and file a completed Form 8283 (Section A), Noncash Charitable Contributions.

For claimed noncash contributions of $5,000 or more, in addition to a contemporaneous written acknowledgment, the donor must obtain a qualified appraisal and complete and file either Section A or Section B of Form 8283 (depending on the type of property contributed). For claimed noncash contributions of $500,000 or more, a donor must meet the requirements for a contribution of $5,000 or more and also attach the qualified appraisal to his or her return.

Reasonable-cause exception for a qualified appraisal

The IRS explained in the preamble to the final regulations that it is deleting Prop. Regs. 1.170A-16(f)(6) from the final regulations because its standard for the reasonable-cause exception was inconsistent with the Tax Court’s position in Crimi, T.C. Memo. 2013-51.

Qualified appraisers

The regulations define a “qualified appraiser” as an individual with “verifiable education and experience in valuing the relevant type of property for which the appraisal is performed” (Regs. Sec. 1.170A-17(b)(1)). Verifiable education and experience means the individual has successfully completed professional or college-level coursework in valuing the relevant type of property and has two or more years’ experience in valuing that type of property or has earned a recognized appraiser designation (Regs. Sec. 1.170A-17(b)(2)).

Because appraisers may need more time to meet the new education and experience requirements of Regs. Sec. 170A-17, the new requirements apply only to contributions made on or after Jan. 1, 2019. The IRS also rejected a suggestion that the appraiser should have education or experience, noting that is contrary to the statute.

Effective date

Except for the qualified appraisal and appraiser requirements, the regulations are effective for contributions made after July 30, 2018, the date they were published as final in the Federal Register. But the IRS noted that the effective dates of the provisions of the American Jobs Creation Act of 2004 and the Pension Protection Act of 2006 relating to substantiating and reporting charitable contributions precede the effective dates of the regulations, and the provisions of the two acts apply in accordance with their own applicability dates.

Sally P. Schreiber, J.D., ( is a JofA senior editor.


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