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Welcome to another
edition of the ACA
Appraiser's Update. This issue is packed with what ACA is
known for providing: hard-to-find information for the personal property
appraiser.
In this edition AQB Certified Instructor Bill Novotny addresses an
issue of particular importance to the generalist appraiser: steps to be
taken by the appraiser who has limited experience and knowledge
regarding a particular type of property. This is a two-part article.
The second part will appear in the next ACA Appraiser's Update
and will elaborate on the issue by means of two mini-case studies.
In this Update we also address whether or not appraisers who
volunteer at museums or historical societies are permitted to do
appraisals of items being donated to the institutions at which they
volunteer.
Be sure to read our caution regarding reference resources you discover
while doing research on the Internet. It's one thing to have a hard
copy of an auction catalog in your library to reference at will. It's
another thing entirely to reference an Internet resource that might be
here today but gone tomorrow.
Two other articles by Dave Maloney round-out this edition's editorial content.
One focuses on donation appraisals for items valued in excess of
$20,000 and the manner in which the IRS prefers photos be submitted and
items identified. The second regards the appraiser's use of citations
and declarations for donation appraisals. Dave explains that injecting
complex citations and declarations into appraisal reports can be
troubling on several fronts, particularly since there is no requirement
for using them in the first place. As is sometimes the case, less is
more.
Also, below you will also find a notice regarding the re-emergence of Maloney's
Antiques & Collectibles Resource Directory. If you are a
specialist (appraiser, dealer, auctioneer, expert, etc.), you are
welcome to be listed. There is no cost of obligation.
We hope you enjoy this issue. Feel free to submit your
appraisal-related questions to us should you have the need.
 Sincerely,
Dave Maloney and
Bill Novotny
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Generalist Appraisers Face Competency Issues
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 Generalist appraisers must be aware of the limitation of
their knowledge and experience. Such limitations could require the
scope of work to be expanded or a competency disclosure to be made to
the client.
This is the first part of a two-part article focusing on the generalist
appraiser and the issue of competency.
Both the SCOPE OF WORK RULE as well as the COMPETENCY RULE
of USPAP contain disclosure requirements that are particularly relevant
to the generalist appraiser.
- The SCOPE OF WORK RULE's
disclosure requirement mandates that sufficient information be
disclosed to allow users to understand the scope of work actually
performed in the assignment. A scope of work disclosure typically
addresses such issues as the type and extent of research
performed, or the assistance that was provided by an expert.
- The COMPETENCY RULE's
disclosure requirement calls for the appraiser to disclose a lack
of knowledge and/or experience to the client before accepting the
assignment or at whatever point in the appraisal process that it
becomes apparent to the appraiser that his or her lack of
knowledge and experience will prevent the development of credible
assignment results. This is referred to as a "competency
disclosure."
Which
of the two disclosure requirements to follow depends upon the extent of
the knowledge and experience of the appraiser in regard to a specific
subject property. One or the other disclosure rules must apply.
This paper explores critical considerations that go into making that
decision. It also examines related USPAP requirements that have
particular relevance to generalist personal property appraisers who
often encounter objects about which they have limited experience. It is
when such properties are encountered that an appraiser must choose
whether or not to expand the scope of work or make a competency
disclosure to the client. ...read all
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Can Museum Appraiser/Volunteers do Appraisals?
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 Donees, staff and their relations are prohibited by the
IRS from doing appraisals of items being donated to their respective
institutions. But what about volunteers such as committee members or
members of the BOD? Are they, too, prohibited?
For the most part, IRS Pub 561 is clear
as to who may and may not do appraisals for Federal income tax
purposes, including non-cash charitable contributions. Those who may
are termed "qualified appraisers." Those who are not are termed
"excluded individuals."
Pub 561
specifically states that there are several categories of individuals
who are excluded from doing such appraisals for donation purposes.
Excluded are:
- The
donor, or the taxpayer claiming the deduction
- The
donee (i.e., the receiving institution)
- The
party who sold the property to the donor (unless the sale was
within the past two months and the appraised value does not exceed
the sales price)
- Any
persons employed by the above
- Any
person related to any of the above or married to a person related
to any of the above
- Any
person who appraises regularly for the donor, donee or the party
who sold the property to the donor and does not perform the
majority of appraisals for other parties.
- In
addition, "...a person is not a qualified appraiser for a
particular donation if the donor had knowledge of facts that would
cause a reasonable person to expect the appraiser to falsely
overstate the value of the donated property." An example
would be if the donor and the appraiser agreed to a predetermined
value which the donor knows is too high (for a donation appraisal)
or too low (for an estate appraisal.)
While Pub 561 clearly states that employees of the
donee are excluded from doing appraisals, it does not address those
appraisers who happen to serve in a volunteer capacity.
Appraisers often volunteer to serve at museums or historical societies
as committee members, docents, board members or assistants to paid
staffers such as librarians or curators.
According to the International Council of Museums, "...when the
museum itself may be the beneficiary, appraisals of an object or
specimen must be undertaken independently." Since museums are
prohibited from doing appraisal, it is often natural for them to call upon
the services of talented volunteers who also happen to be appraisers,
but they should not do so.
The underlying issue, as is often the case, involves actual (or
perceived) appraiser bias. The ETHICS RULE of USPAP prohibits the
appraiser from performing an assignment "with bias," which
USPAP defines as "a preference or inclination that precludes an
appraiser's impartiality, independence, or objectivity in an
assignment."
It is such a natural inclination that it would be hard for any
volunteer serving in an official capacity to argue that they did not
have a bias which was favorable to their institution. More importantly
(and more to the point), a "reasonable person" would likely
feel the same way.
While the issue of volunteer appraisers is not addressed in IRS Pub
561, an IRS representative has stated, "I would consider board
members or committee members, even volunteers, as being prohibited from
appraising items donated to their institution."
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Internet
Resources Are Ephemeral
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Results from Internet research
often soon disappear or are altered, so keep a contemporaneous workfile
record of your findings.
 I was recently tapped as the personal property appraiser
for a class action law suit involving homes built with Chinese drywall.
According to the complaint, Chinese drywall emits gasses which form a
corrosive (and unhealthy!) atmosphere that is capable of causing damage
to electronic equipment, and electrical systems and appliances.
Along with my appraisal report of the personal property that had been
contaminated, I submitted to my client evidence of the each resource I
had used as a basis for my value conclusions. This resource evidence
consisted largely of print-outs of pages from national chain store web
sites at which replacement items could be purchased by the complainant.
Unfortunately, I neglected to print out a web page for one of the many
items I had appraised. I discovered my oversight only after having
submitted my final report and while preparing for deposition. When I
eventually returned to the web page, the item's price had been changed.
Resource data located on the Internet is ephemeral. It is here today
but might very well be gone tomorrow. When you locate and make use of
Internet resource information, be sure to print it out and store it in
your assignment workfile. You may also wish to "print" the
page to your hard drive as a .pdf file. Failure to preserve the
information in some fashion may cause difficulties should your
testimony at deposition or in trial be required at some point in the
future. It is entirely possible that by then the online resource
information on which you based your opinions will have been altered or
even removed entirely from the Internet. Should that occur, when
testifying you will be unable to produced the resource evidence upon
which you based your opinions.
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IRS Guidance: Donation Appraisals for Artwork Exceeding
$20K FMV
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The IRS provides additional
guidance involving the donation of artwork having a Fair Market Value
exceeding $20,000.
 Taxpayers and appraisers often refer to IRS Pub 561 Determining the Value of Donated Property
in order to ascertain what constitutes a qualified appraisal, i.e., what
IRS-required elements of information must be contained in appraisals of
property being donated for which a deduction in excess of $5,000 is
being claimed by the taxpayer.
But in addition to Pub 561, the IRS Office of Art Appraisal
Services (AAS) has issued additional amplifying guidance regarding the
appraisal of donated works of art which are valued at over $20,000... read all
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Citations and Declarations for the Donation Appraisal
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Appraisers demonstrate creativity
with donation appraisal citations and declarations. But is it
necessary?
 The requirements for including citations or declarations
in any personal property appraisal report normally originate from such
sources as USPAP, the IRS, a law or regulation, a societal mandate, or,
albeit it rarely, even the client. But given the plethora of IRS
regulations, rules, publications and forms, it is often in the donation
appraisal that we find the appraiser demonstrating the greatest of
originality in the design of sometimes rather elaborate citations and
declarations...read all
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Maloney's Antiques & Collectibles Resource Directory
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 Dave Maloney announces the return of his
highly-acclaimed "Maloney's Antiques & Collectibles Resource
Directory."
Before a recent ten-year hiatus, Maloney's was published in book
form for fourteen years during which time it was hailed as the
"...best one-volume research tool in print" (Gannett News
Service) and as a Best Reference Book (Library Journal.) "We plan
on launching a subscription-based online version of the directory in
early fall and publishing in book form this winter," said Maloney.
With over 17,000 resources in over 3,000 categories of antiques and
collectibles, "Maloney's" is known for its accuracy and for
being the only comprehensive resource of its kind in existence. And now
it will be online and fully searchable!
Specialist resources such collectors, dealers, experts, appraisers,
clubs, etc. are welcome to submit their listing application at http://www.maloneysdirectory.com. "As
usual, there is no cost or obligation to be listed," added Maloney.
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Complete ONLINE Appraisal Course
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 First and only complete
online course for the personal property appraiser
This online course makes use of the latest in sophisticated
university-level learning management software to present a thorough and
professionally-designed learning experience complete with reading
assignments, Flash video reviews, a detailed online glossary, self-assessed
testing, and, most importantly, course material that is thoroughly
integrated with USPAP - a first in the profession...read all
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Appraising Personal Property: Principles & Methodology
- 3rd Ed.
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 Appraising Personal Property:
Principles & Methodology - 3rd Ed. by Dave Maloney
(Appraisers Press, 550 pages, softcover, 8 1/2 x 11, $68.85 + S&H)
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