Federal estate valuations are governed by a complex web of statutes. While Treasury Regulation § 1.170A-17 specifically defines qualified appraisals and qualified appraisers for charitable deductions, the IRS and the Tax Court routinely import these rigorous substantiation mechanisms into estate and gift tax examinations under Internal Revenue Code § 2031 and § 2032.
Under these regulations, a qualified appraisal must be conducted by an individual who holds an appraisal designation from a recognized professional organization or has otherwise met minimum education and experience requirements. In practice, this means credentials like MAI (Member of the Appraisal Institute) for real estate, or ASA (American Society of Appraisers) and AAA (Appraisers Association of America) for personal property. The expert must demonstrate verifiable coursework and field experience in valuing the specific type of property at issue.
When an estate requires a date-of-death property valuation, the appraiser must isolate the exact valuation date. They cannot use an arbitrary window weeks after the decedent’s passing without reconciling intermediate market shifts. The report must spell out:
- The precise method of valuation (such as the market comparison approach, income capitalization, or replacement cost).
- The specific factual basis justifying that method.
- The appraiser’s professional qualifications and background.
- A signed statement confirming the appraiser is not the donor, the decedent, a beneficiary, or an interested party to the estate.
