Office Hours with the Director of Education - January 2025
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Friday, January 17, 2025 in Ask an Instructor, Education
Welcome to the ISA "Post Office Hours" blog post! This post serves as a follow-up to our recent Office Hours session, where members submitted questions in advance. Below, you'll find answers to these submitted questions.
For now, only pre-submitted questions are included, as live questions will not be addressed in this format. We encourage you to submit your questions to the Director of Education at directorofeducation@isa-appraisers.org in advance.
We hope this resource continues to support and inform our members effectively.
Q: Is it still 2024 USPAP even though we are in 2025?
A: Yes, the 2024 edition is the most current version of USPAP. You do not write it as “2024-2025 USPAP”. Remember, we are USPAP Compliant (not certified)
Q: I am working on a non-cash charitable contribution appraisal report and am confused about my effective date. The donor signed the deed of gift on 12/6/24. The donee signed the deed of gift on 12/12/24. The donated object left the donor’s home on 12/17/24. Which date is the effective date?
A: The effective date is the date of donation. In this case, the effective date is 12/12/24. This is when title of the property officially transfers from the donor to the donee. Once both parties sign the deed of gift, the title is officially transferred. The deed of gift is only complete once the second party signs.
Q: I am working on a donation with an item valued over $20K. How should I handle the IRS photograph requirements?
A: Publication 561, page 4 addresses the photo requirements. It says, “a photograph of a size and quality fully showing the object, preferably a high-resolution digital image, must be provided if requested.” It is important to note that the images are the responsibility of the taxpayer if requested and not necessarily the appraiser. I typically include thumbnail photos of all items in the body of my appraisal. If it includes works valued above $20,000, then I include a full-page image as well and detail images. I also typically include a statement like this: “The photographs included in this appraisal report are for reference only. The client is responsible for any additional photographs of the donated property if requested by the IRS.” This alerts your client that this may come up in the future and that it is their responsibility.
Q: When does Blockage apply?
A: Blockage is defined as “a discount applied to value to reflet the depressive effect on value caused by the sudden offering for sale of a large number of identical or very similar items at the same time. In such a case, the market finds it difficult to absorb all the items quickly and, as a result, value is depressed” (Core Course Manual, 6-12).
As appraisers, we must determine whether blockage applies to a specific subject property, which will necessitate a thorough market analysis.
Q: Can I round my determined values when appropriate? For example, can a fair market value of $36,987 be rounded to $37,000?
A: Yes, it is typically appropriate to round to the nearest whole number. I sometimes include a statement in my report that values were rounded to the nearest 10 or 25, depending on the intended use and circumstances of my appraisal. In a damage/loss claim, I may provide a repair cost exactly as provided in the repair person’s estimate. Similarly, I may provide an exact scrap value. With that being said, it is okay to round in most scenarios!
Q: What appraisal software is best?
A: This is a personal preference! There are several software programs available and each have their own benefits and disadvantages. I do not personally use a software progam, but many of our members do. If you want feedback about a certain system, I suggest posting it on the Facebook Forum so our colleagues can provide their input.
Q: The museum is paying for a donor’s non-cash charitable contribution appraisal report as part of the donation. Since the museum is paying me, is the museum my client?
A: Your client is not necessarily the one who is paying you, though this is often the case. Your client is who the appraisal is for. In this case, your appraisal is for the donor to take an income tax deduction; therefore, your client is the donor.
As an aside, it is a good idea to have a contract that addresses this situation with signatures from both a representative from the museum and the donor.
Q: Can I average my comps together to determine FMV?
A: We analyze market data in several ways, including by considering mode and mean. Mean is the statistical average; Mode is the result most frequently observed. As appraisers, we should primarily be looking at modes of behaviors. If you have several sales that are close together (both in time and number), it may be okay to consider the mean, but mode is generally preferred.
If you do not observe a mode, and the realized prices are all over, then you need to do more research to determine why. Consider the value relevant characteristics and circumstances of the sale.
Q: I was contracted to do a collection assessment that may (or may not) lead to a full appraisal report. Can I count these hours towards accreditation even if it doesn’t lead to a full appraisal?
A: As a Partner of the Appraisal Foundation, we adhere to Personal Property Appraiser Qualification Criteria. Qualifying appraisal experience consists of tasks associated with the accomplishment of personal property assignments which result in a USPAP compliant report; therefore, just inventorying or cataloguing personal property does NOT meet this requirement. HOWEVER, if you turn the assignment into a USPAP compliant appraisal report, then the hours inventorying would count because they led to the completion of a USPAP compliant appraisal.
Q: What activities qualify for inclusion on the 700 HR USPAP work log?
A: You can find the qualifying activities described at the top of the 700 HR USPAP log itself. It is on our website and available for download from inside your Member Profile.
Q: Now that I've completed the Core Course and passed my exam, I am curious what next steps I should be considering as an appraiser focused on collector vehicle appraisals rather than gems or fine art.
A: In terms of ISA credentialing, the next level is ISA AM, which is Accredited Membership. As I previously noted, you have 3 years to reach this level after becoming an ISA member. An Accredited Member of ISA has achieved the designation of a qualified appraiser as defined by the Appraiser Qualifications Board of the Appraisal Foundation. These members have declared a specialty and have completed 700 hours of appraisal related experience. There are two pathways to achieving your AM at ISA.
The first is to complete an ISA Specialty Studies Course – either Fine Art or AFDA. These courses are taught live online or through distance education.
The second option is through the Specialty and Advanced Studies Committee. These are for members that have a narrow area of expertise, like gems & jewelry, and potentially collector vehicles. There is an application process where you must demonstrate that you are a viable candidate for SAS. There are also some prerequisites depending on your area of expertise. For instance, if you want to declare a specialty in Gems and Jewelry, you must have a graduate gemologist diploma from GIA or a similar program. If you are a Native American Art Specialist, you must demonstrate that you are an expert in this area.
As a collector vehicle appraiser, you may want to consider the SAS pathway. I recommend contacting other vehicle appraisers for any recommendations on conferences, memberships, and other relevant coursework to further your education in this specific area. You must demonstrate that you have a specialty in this area. You can also start working on amassing your 700 hours of appraisal-related experience, which is a prerequisite for the SAS pathway.
Q: Should I include a copy of the Deed of Gift in my appraisal report?
A: This is not required, but I typically include a copy of the deed of gift (DOG) in the appendix of my report. What is required is that the date of donation is the effective date. This is the date when the DOG is completed – when it has signatures from both the donor and the donee. You also need to state the terms of the donation in your appraisal report. For instance, are there any restrictions? Restrictions could have an impact on FMV.
Q: Can my client deduct my fees for completing a US donation appraisal?
No, your client can’t deduct any fees paid to determine fair market value of the donated property, according to publication 526.
Q: Can all donated property going to the same donee be in one appraisal report?
Yes, all donated property going to the same donee on the same donation date (effective date) can be in one appraisal report. Put “similar” items together. There is guidance on similar items in Form 8283 instructions.
Separate “similar” items from “dissimilar” items in your report using headers or chapters.
If you have more than one donee or more than one donation date, then you will need separate appraisal reports. Remember, your effective date will probably vary for each appraisal because title will officially transfer on different dates.
Q: How do I fill out Form 8283?
ISA recommends filling out Part IV only. This is best practices. You should address how the form is being handled in your appraisal report. This is also on the ISA checklist.