IRS Guidelines

I was searching the ISA site for some information on personal property appraising and came across this document called the Internal Revenue Manual or IRM.  I believe the manual is meant for IRS employees in what to they should look and expect for appraisal supporting various types of tax returns.  Most items are from 2006, pre Pension Protection act, but much of it is very applicable.  Below is the first section from the Personal Property section introduction.

Other sections are on development guides, planning, identifying, documenting, analyzing, workpapers, reviewing,  resolution guidelines, objective, conclusions etc.  Each section is just short sentences or bullet points, very refreshing for an IRS document. It is easy to read and easy to follow, and receive a very good idea of how the IRS are to review personal property appraisal reports and and how value conclusions should be supported.  Not ground breaking information or really anything most professional appraisers dont already know, but it is nice to see it in an easy to follow and understand format.  I recommend all appraisers print it out, save and refer to every once in a while as refresher of what the IRS is looking for in a personal property appraisal report and value conclusion.

Look below for links to my viewer with the document, or go direct to the web pages within the Internal Revenue Manual on the IRS website.


1. The purpose of this document is to provide guidelines applicable to all IRS personnel that are engaged in valuation practice (hereinafter referred to as valuators) relating to the development, resolution and reporting of issues involving tangible personal property valuations and similar valuation issues. Within these guidelines the term personal property refers to tangible personal property. Valuators must be able to reasonably justify any departure from these guidelines.

2. Personal property includes but is not limited to paintings, watercolors, prints, drawings, sculpture, ceramics, furniture, decorative arts, antiques, textiles, carpets, silver, rare manuscripts, historical memorabilia, antiquities, ethnographic art, collectibles, gems and jewelry. Machinery and equipment and other items classified as personal property are all intended for inclusion. The guidelines provided here regarding identifying, documenting and analyzing the property are applicable to all types of personal property. The information cannot provide specific details for every type of personal property, but a similar detailed breakdown can be outlined for any kind of property.

3. IRM 4.48.2, Valuation Assistance for Cases Involving Works of Art, which requires all taxpayer cases selected for audit with taxpayer claimed values of $20,000 or more per item of art to be sent to Art Appraisal Services for review by the Commissioner’s Art Advisory Panel is still applicable.

4. This document incorporates by reference the ethical and conduct provisions, contained in the Office of Government Ethics (OGE) Standards of Ethical Conduct, applicable to all IRS employees.

5. Valuation of assets owned and/or transferred by or between controlled taxpayers (within the meaning of Treasury Regulation section 1.482–1(i)(5)) may present substantive issues that are not addressed in these guidelines. (07-01-2006)
Development Guidelines

1. Successful completion of a valuation assignment includes planning, identifying critical factors, documenting specific information, and analyzing the relevant information. All relevant activities will be documented in the workpapers.

2. A review appraisal may be the best approach to the assignment. (07-01-2006)

1. Valuators will adequately plan the valuation assignment. Their managers will supervise the staff involved in the valuation process.

2. Quality planning is a continual process throughout the valuation assignment. (07-01-2006)

1. To determine a valuation conclusion, valuators should define the assignment and determine the scope of work necessary by identifying the following:
A. Property to be valued
B. Interest to be valued
C. Effective valuation date
D. Purpose of valuation
E. Use of valuation
F. Statement of value
G. Standard and definition of the value
H. Assumptions
I. Limiting conditions
J. Scope limitations
K. Restrictions, agreements and other factors that may influence value
L. Sources of information

2. The interest to be valued includes:
A. Fee simple, leased fee, etc.
B. Fractional interest
C. Personal property held in partnerships, corporations and trusts
Click HERE to view the guidelines in an online viewer or HERE to visit the IRS page.

No comments: