Mineral appraisals are a unique subset of valuation services that are needed for transacting mineral rights. Mineral owners require appraisals for a variety of reasons. Commonly, the requirement is for a transfer of ownership that may be reviewed by the Internal Revenue Service. The IRS has higher standards and expectations for the methods that are used to arrive at the fair market value. Appraisals meet these standards and are different from valuation in that appraisers are bound by appraisal standards.
Appraisal for IRS Purposes
The IRS is watching and they want their share. Reporting the value of mineral rights to the IRS may be for estate tax purposes, dissolution of marital assets, a sale to a family member or business associate, estate planning, donation, or any other reason.
Transactions that are not considered “an arm’s length transaction” such as moving assets into a trust or gifting to a relative or other related party will draw additional scrutiny. The IRS seeks to ensure reported values of transacted properties are done so consistent with fair market value standards. A mineral appraiser providing an independent, third-party appraisal will give you the confidence you need when reporting to the IRS the value of the property as of the effective date.
Donations
The tax code requires certified appraisals which meet very specific legal requirements for donations of personal property. The IRS has specific appraisal requirements for donations of personal property that are detailed below.
If you make a donation to a tax-exempt organization, you may claim a deduction for the fair-market value of the item or group of items. If the fair-market value exceeds $5,000 you must get a certified appraisal of the donated property from a qualified appraiser. Our certified appraisal report, accompanied by a signed copy of IRS form 8283, will meet all IRS requirements for determining fair-market value of your donation. Although appraisals are required for donations exceeding $5,000, it often makes sense to get an appraisal for lesser valued donations, as this will support your claim of value should you be audited.