FCG Valuation Case E-Flash Mohamed v. Commissioner

Authored by Chris D. Treharne, ASA, MCBA, BVAL of Gibraltar Business Appraisals, Inc. a member firm of FCG Issue 14:2

Joseph Mohamed, Sr. and Shirley Mohamed, Petitioners v. Commissioner of Internal Revenue, Respondent 
TC Memo 2012-152, Docket Nos. 13947-07, 12882-08, Filing date May 29, 2012, Judge Holmes

Taxpayers donated real estate to a trust for the benefit of a charity. The court concluded that the actual value of the claimed deduction may have been understated. It also concluded that Form 8283 might be misleading to someone who did not read the associated instructions. Even so, the court denied the deduction.

The Takeaway
The taxpayers’ income tax credit of at least $7.6 million was disallowed even though the court acknowledged that the taxpayers’ estimated charitable deduction was likely understated. If the taxpayers had submitted a qualified appraisal prepared by a qualified appraiser, they would have overcome one of the obstacles associated with acceptance of their charitable deduction.

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