According to the IRS tax code, a gift is any type of property that changes hands either with nothing given in return, or with payment that is less than the property\’s value. Gifts are subject to a gift tax, which is usually paid by the gift giver. The gift tax is one of the more complex pieces of tax law, so it is a good idea to speak with an accountant to see if your gifts are taxable or tax exempt. Some of the gifts that are exempt are gifts between spouses, gifts made to pay for educational expenses, and charitable gifts. There is also an allowable value of gifts you can give before you are required to pay a gift tax. If, after speaking to your accountant, you determine that your gift/donation is subject to the gift tax, you will need to hire an appraiser.
If you owe the IRS a gift tax, you must submit a copy of the appraisal report along with your tax return, in addition to the date of the exchange and the identity of the recipient. Ask your appraiser to give y ou the fair market value of the piece of property that you are gifting. The fair market value is the value of the property if it were sold by a willing seller and purchased by a willing buyer.
If you need a machinery or equipment appraisal performed before tax time, EquipNet can help. Check out our Asset Accuracy Resource Center for more information about appraisal and valuation services provided by EquipNet. For other tips about donating your pre-owned equipment, visit the Equipment Donations Resource Center.