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Doing Appraisals that will pass IRS Scrutiny

by Administrator on Nov 18, 2015 Property Tax Dispute 422 Views

It's not like doing everyday appraisal assignments isn't challenging enough, appraiser's all have parties who depend on the quality of their work, but doing assignments that will be reviewed by the IRS adds another level of concern.

Most appraisers have nothing to worry about if they are doing appraisal assignments on property types that they are familiar with.  The only real potential for trouble that an appraiser has is taking assignments that they know are bound for the IRS when they have little or no experience doing that specific property type.  It's just common sense, you don't want to take your first golf course assignment knowing that it's going to end up on an IRS reviewer’s desk. 

If you really think that the IRS lacks the sophistication necessary to evaluate your appraisal reports then you must be doing rocket science based appraisals.  The IRS can and will take the time and effort to review anything if the dollars are large enough to warrant their time.

Many IRS related assignments that I have done relate to the taxation of estates.  While I get some that are soon after a partnership dissolves or after a partial owner dies, there are others that no one pays any attention to until the IRS comes knocking.  The IRS expects valuations to be completed and is not forgiving when they find that they have not been done.  

It's more difficult for most appraisers to complete an appraisal report on a property as of a long passed retrospective date than a current date, so the assignment usually ends up costing a client more money if they waited to have it done. 

Partial interests are also an issue that must be resolved for many IRS appraisals.  Appraiser's must do a credible job of determining value and an appropriate market discount and / or a minority discount at times must be applied.  Fractional or partial interests occur less often than they used to but they always seem to return as an appraisal problem that must be resolved.

Since there is a great deal of tax risk associated with how large a discount should be there are some appraisers and some accountants who specialize in discounting, and many specialists charge a significant fee for this additional service. 

For more appraisal information contact Glenn J. Rigdon MA, MRICS, ASA is a Las Vegas / Henderson Nevada based appraiser who can be contacted via email or via his business website known as Appraiser Las Vegas  (, or you can also click on “Contact Us” on the home page of this website or visit my public profile at LinkedIn at

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