U.S. Appraisals

Client Profile:
Mr. Robert Adams, a seasoned art collector based in New York, owned an extensive collection of American contemporary art valued at approximately $500,000. His collection included rare pieces from renowned artists, as well as works from up-and-coming talents, gathered over 15 years.

Situation:
In the summer of 2023, a severe electrical fire broke out in Mr. Adams’ home. The fire caused significant damage to his living room, where most of his collection was displayed. Several paintings were destroyed entirely, while others sustained severe smoke damage. Mr. Adams promptly filed an insurance claim with his homeowner’s policy to cover the damages to his property.

Problem:
While Mr. Adams had receipts for the purchase of the artworks, the insurance adjuster, who lacked expertise in fine art valuation, was unable to properly assess the extent of the damage or the value of the artworks. The insurer required proof of the artworks’ pre-loss value and condition, but Mr. Adams had never commissioned an insurance appraisal for his collection. The receipts and photos were insufficient for a comprehensive valuation, leading the insurer to question the total claimed amount.

Solution:
Mr. Adams hired a qualified personal property appraiser with experience in fine art valuations to prepare a post-loss appraisal. The appraiser reviewed the available documentation, including gallery sales records, artist profiles, and other market data, to establish the pre-loss value of the artworks. This involved identifying comparable pieces, considering artist recognition, and evaluating market trends. The appraiser provided an itemized report detailing each artwork’s replacement value and condition before the fire.

Conclusion:
Despite the appraiser’s efforts, the insurance company only approved a payout that covered 70% of the replacement cost, as the lack of a prior formal insurance appraisal meant there was insufficient evidence to support the full value of the collection. Mr. Adams learned the hard way that obtaining an insurance appraisal for valuable personal property—such as art, antiques, and collectibles—before a loss occurs is essential to ensure full coverage and avoid disputes during claims.

Client Profile:
Dr. Linda Chen, a retired physician and long-time art patron in California, owned a painting by a well-known mid-century American artist. The painting, held in her personal collection for over 20 years, was recently valued in the range of $85,000. As part of her philanthropic goals and estate planning strategy, Dr. Chen decided to donate the artwork to the art museum at a public university where she had previously funded scholarships.

Situation:
The university’s museum confirmed that the donated artwork aligned directly with its curatorial mission and educational use. This “related use” classification qualified Dr. Chen to claim a charitable tax deduction equal to 100% of the artwork’s fair market value under the Tax Reform Act of 1986.

Compliance Requirements:
Because the appraised value of the donation exceeded $20,000, IRS rules required Dr. Chen to include a signed, qualified appraisal with her tax return and submit IRS Form 8283 (Noncash Charitable Contributions). A mere estimate or gallery invoice would not suffice.

Solution:
Dr. Chen engaged a qualified personal property appraiser—an ISA Accredited Member with USPAP-compliant reporting credentials—who prepared a written appraisal to determine the artwork’s fair market value. The report included full documentation on provenance, condition, artist market comparables, and recent auction results, ensuring both IRS compliance and defensibility of the valuation.

Outcome:
The IRS accepted Dr. Chen’s deduction without challenge. The university added the painting to its permanent collection and publicly acknowledged Dr. Chen’s donation. Beyond the significant tax benefit, Dr. Chen also met her philanthropic objectives and furthered her legacy in the arts.

When donating fine art valued over $5,000—and especially above $20,000—a qualified appraisal is essential not only for maximizing the tax benefit but also for complying with federal requirements. Working with a reputable appraiser ensures that donors are protected from IRS scrutiny and able to claim the full allowable deduction.

Client Profile:
In 2023, following the passing of Mr. Charles Whitman, a retired architect in Connecticut, his three adult children were named co-executors of his estate. Among the various assets listed in the will, Mr. Whitman left behind a collection of fine art, antique silverware, and a curated group of rare first-edition architectural books—items he had collected over five decades.

Situation:
As part of the federal estate tax filing requirement, the estate’s attorney advised that any single item or group of similar items exceeding $3,000 in value must be formally appraised and reported to the IRS. In this case, three items triggered the requirement:

• An original etching by Frank Stella, estimated at $18,000
• A sterling silver tea service inherited from Mr. Whitman’s grandmother, valued collectively at $12,000
• A first-edition book set of 19th-century architectural treatises, estimated at $9,000

These values exceeded the $3,000 reporting threshold, necessitating a formal appraisal.

Action Taken:
The executors engaged a qualified personal property appraiser—an Accredited Member of the International Society of Appraisers (ISA), with USPAP-compliant credentials and experience appraising fine art and decorative objects.

The appraiser conducted an on-site inspection, verified provenance and condition, and researched comparables from both the private and public market to determine accurate fair market values as of the decedent’s date of death. A detailed, signed appraisal report was produced, accompanied by a separate statement of the appraiser’s qualifications as required by the IRS.

Outcome:
The appraisal report and appraiser’s credentials were submitted alongside IRS Form 706 (United States Estate Tax Return). The report withstood IRS scrutiny, and the estate successfully moved forward with tax clearance and equitable asset distribution among heirs. In addition, the report proved useful in determining the fair share of personal property assets for the heirs without dispute.

For estate tax compliance, when art or collectible items exceed $3,000 in value, the IRS requires a qualified appraisal accompanied by proof of the appraiser’s credentials. Early engagement of a certified professional not only satisfies regulatory demands but also facilitates a smoother and more transparent estate settlement process.

Client Profile:
In 2022, Julia and Robert Mitchell, a couple in their early fifties residing in Seattle, Washington, initiated divorce proceedings after 22 years of marriage. Over the years, they had acquired a significant collection of personal property, including original contemporary artwork, vintage wine, designer furniture, and rare collectibles. Julia, a graphic designer, had emotional ties to many of the artworks, while Robert, a tech executive, had invested heavily in collectible watches and mid-century modern décor.

Situation:
During divorce mediation, disputes arose over the value and division of several high-value items. Since both parties had contributed financially and emotionally to the acquisitions, it became essential to determine fair market value for the property to ensure an equitable split. Their attorneys recommended a formal equitable distribution appraisal that would hold up in mediation—and in court if necessary.

The contested items included:

• A large oil painting by a known Pacific Northwest artist
• A collection of 1970s Rolex watches
• Danish modern dining furniture set
• A climate-controlled case of Bordeaux vintages from the 1990s

Given the potential for conflict and legal escalation, an unbiased and professional valuation was critical.

Action Taken:
The parties jointly agreed to retain a qualified appraiser with specialized knowledge in fine art, collectibles, and luxury personal property. The appraiser, a certified member of the International Society of Appraisers (ISA), was instructed to produce a USPAP-compliant report using Fair Market Value as the standard, based on current market conditions.

The appraiser conducted an on-site evaluation, documented each item with high-resolution photographs, verified authenticity where applicable, and conducted market research to support each valuation. The final report included itemized values, descriptive details, and a formal certification of the appraiser’s qualifications.

Outcome:
The appraisal report became the cornerstone of the couple’s property division agreement. With an objective third-party valuation in hand, the parties were able to:

• Assign clear monetary values to each asset
• Structure a fair distribution—Julia retained the art and furniture; Robert retained the watches and wine
• Avoid litigation and resolve the settlement during mediation

The report was also entered into the court record, and the divorce was finalized without further dispute. The appraisal’s clarity and credibility contributed to a smoother dissolution process and ensured both parties felt the outcome was fair.