Episode Transcript
[00:00:00] Speaker A: Hi there. Welcome to another episode of Investment Insight presented by McKay Wealth Advisory. I'm Bradley Covert sitting down Today with Brent McKay. Brent, hearing a lot about this 850 year old painting and I guess it impacts our taxes somehow. Can you explain that?
[00:00:13] Speaker B: Right, so it's kind of interesting. So anytime you donate goods or a painting or stuff, you know, anything of a large value, over $5,000, there's a very high likelihood you'll get an IRS audit. Because when you're donating cash, it's very easy to figure it out. But other things aren't so easy. And so here's a story where the Tang family in New York, based out of China, they donated paintings from 850 year old paintings, early Chinese art that their appraiser estimated was worth $74 million.
Now the IRS wanted to say the paintings are worth nothing, but because the court said they had good intentions, they actually lowered that amount to $54 million of their donation. Now they still are required to pay a two million dollar tax penalty on their donation.
But the irs, when it comes to looking at this stuff, this category includes art, real estate, collectibles, non traded stock. So a lot of our customers want to donate real estate primarily, you know, when they die, to a charity or maybe some closely held family stock.
And so you gotta be very careful with this. So the IRS rules can invalidate the entire donation if you don't do it correctly. So if you're donating over $5,000, there's stringent requirements on the appraiser to make sure that they're actually qualified. In this case, the China Guardian, which is the second largest appraiser of art in China, did not count according to the irs. But because the Tang family thought, hey, the second biggest appraiser in the country would qualify, they still, the court gave them a reduced but still $54 million deduction. So if you're giving over $5,000 in non cash related, you know, investments, just make sure you're careful. Now this can apply to estates, you know, if even if you're transferring, you know, getting a stepped up cost basis on a barn or farmland is make sure your appraiser qualifies for what they're appraising or there's a good chance the IRS will look back. Now there's a 60 days from when you give the gift or your tax filing deadline is when you're required to file form 8283. You know, we're not accountants, we're not lawyers, so seek out common advice. But one of the things that also people should consider is when you're donating items over $5,000, take a little precaution or, you know, if you're getting maybe some stepped up values on property because, because know, death or inheritance, make sure you're paying for the good appraiser or even this very wealthy family. It can happen to you where you'll be in an IRS audit and everything will be very heavily scrutinized.
[00:02:52] Speaker A: Absolutely. Brent, thanks for explaining that to us. Thank you for joining us. We'll see you next time.
