Coin donations over $5,000 generally require a qualified appraisal

Plain-English summary

Chief Counsel advised that a taxpayer generally needs a qualified appraisal when donating a coin or coin collection claimed to be worth more than $5,000. The cash exception for readily valued property applies only if the claimed value does not exceed the coins' face amount and the coins are acceptable as legal tender. When the claimed deduction exceeds face value, valuation is a concern and the exception does not apply.

Ruling snapshot

• Question: Does a charitable contribution of coins valued above $5,000 require a qualified appraisal?
• Outcome: Generally yes, unless the claimed value does not exceed face value and the coins are acceptable legal tender.
• Key authorities: IRC § 170(f)(11)

Full text (IRS public release)

ID:          CCA-02050810-16                    Third Party Communication: None

UILC:        170.00-00, 170.12-09               Date of Communication: Not Applicable

Number: 201608012
Release Date: 2/19/2016
From: --------------------
Sent: Friday, February 5, 2016 8:10 AM
To: ----------------------------
Cc: ---------------------------------------
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Subject: Coin Donations


Hi ------–

You have asked whether a qualified appraisal is required under sec. 170(f)(11) when a
taxpayer contributes a coin or collection of coins with a claimed value in excess of $5,000.
The answer is generally yes.

The “readily valued property” cash exception to the appraisal requirements, in sec.
170(f)(11)(A)((ii)(I), is inapplicable to the coins--unless (1) the value claimed by the donor
for the coins does not exceed the face amount, and (2) the coins are acceptable as legal
tender.

Section 170(f)(11) was enacted with the purpose of requiring qualified appraisals to
ensure that contributions of property are not overvalued. See Staff of J. Comm. on
Taxation, 108th Cong., General Explanation of Tax Legislation Enacted in the 108th
Congress 461 (Comm. Print 2005) (“Congress believed that requiring C Corporations to
obtain a qualified appraisal for charitable contributions of certain property in excess of
$5,000 … would reduce valuation abuses.”); see also Staff of J. Comm. on Taxation, 98th
Cong., General Explanation of the Revenue Provisions of the Deficit Reduction Act of
1984 502-510 (Comm. Print 1985) (Discusses how tax shelters were promoting inflated
donation valuations, oftentimes using “independent” appraisals from promoters; notes
that the qualified appraisal rules will “prove more effective in deterring taxpayers from
inflating claimed deductions than relying solely on the uncertainties of the audit process
and on penalties imposed on those overvaluations that detected on audit.”).

When the deduction claimed exceeds the face amount of the coins, there is a potential
valuation issue, and therefore the “cash” exception to the appraisal requirements does not
apply.

If you would like additional advice in connection with coin donations, let us know.

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