ASK AN INSTRUCTOR: Is blockage necessary on a large charitable donation report?
Thursday, January 19, 2017 in Ask an Instructor
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Question: I need help. Is blockage necessary on a charitable donation report? I have a client who is donating a large number of prints by the same artist to a museum. I’m not sure if I need to apply a blockage discount, but it also doesn’t make sense that the client would receive a tax credit on the full amount. What do you think?
Answer: My rule of thumb is that if I would apply blockage for the same property in an estate tax situation, then I would also apply blockage in a charitable donation situation. Remember – fair market value is fair market value whether you are writing an estate tax, gift tax, or charitable donation appraisal report. The IRS has the same definition for fair market value in each of these situations, thus the value determined should be the same as well. If it’s not fair for the client to pay taxes on a large group of property, then it’s also not fair for the client to receive a large tax credit on the same property.
- Meredith Meuwly, ISA Director of Education