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Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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I want to contribute a somewhat specialized collection of books

Customer Question

I want to contribute a somewhat specialized collection of books to a college library. The college will pay the appraiser but insists on issuing me a 1099-MISC form for the fee (although that fee is the appraiser's income, not mine; presumably the college's logic is that the appraisal must predate the donation, so the appraiser will be working for me at that time no matter who pays, since the books will still be mine then - but do they really have to issue the 1099-MISC?). The appraiser will be qualified and will not be a *regular* "employee" of the college or of me. (That is the relevant IRS definition of "employee," isn't it?) My question is: *Presuming* the college issues me the 1099-MISC, what information need I furnish the IRS along with my tax return to reduce the otherwise-high chance of an audit?
Submitted: 4 years ago.
Category: Tax
Expert:  Merlo replied 4 years ago.

Hello Customer,

 

The college should not be issuing you a 1099 for this expense. A 1099 form should only be issued to the person who is actually being paid for the services and not to a third party.

 

It makes no sense that the college would even argue this point. If the college is willing to pay the appraisal fee, then they can write this off as an expense, regardless of who they issue the 1099 form to. This is not income to you and should not be reported as such by the college. It should only be reported as income to the appraiser who is the person receiving the income.

 

If they insist on actually issuing this 1099 form to you instead, you really have no choice but to include this as taxable income on your return. But at the same time you would then show this same amount as an expense paid to the appraiser, so that in effect you zero out any taxable income to you. But you would need to report this on your return just to account for the form.

 

 

Thank you Customer

 

 

 

 

Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
Merlo and 5 other Tax Specialists are ready to help you
Customer: replied 4 years ago.

If I pay the appraiser to appraise the gift - as the college just this morning is now insisting - two questions arise:

1) Need I issue a 1099-Misc to the appraiser (I've never issued such a document before), and more important;

2) Can I legitimately deduct the appraisal fee under any category, e.g., as an expense incident to a contribution (although the appraiser is not a registered charity)?

Many thanks for your help!

Expert:  Merlo replied 4 years ago.

Hello again Customer,

 

1. If you pay the appraiser directly, you could not issue him a 1099 form. 1099 forms are only issued by businesses who pay people for services performed. They are never issued by individuals who pay someone for services.

 

2. If you pay the appraisal fee directly on your own rather than having it paid by the school, you can deduct appraisal fees paid to determine the value of a donation. Instead of adding it to your charitable deduction, this is a miscellaneous itemized deduction subject to the 2%-of-adjusted-gross-income limit.

 

 

Thank you Customer

 

 

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