Recent Tax Court Decision A Good Reminder of Qualified Appraisal Exception

A taxpayer who claims an income tax deduction for a charitable contribution of tangible personal property over $500,000 is required to attach to the tax return a qualified appraisal for such property. What happens if, despite the taxpayer’s best intentions, the appraisal is determined not to satisfy the requirements of a qualified appraisal? The U.S. Tax Court, in WT Art Partnership LP, et al. v. Commissioner, T.C. Memo. 2025-30, recently focused on an exception to the qualified appraisal requirement that typically doesn’t get much attention but which, due to the unique circumstances in this case, was very helpful to the taxpayer.

In 1997, Oscar Liu-Chen Tang (Tang), through the entity WT Art Partnership LP (WT Art), purchased a group of 12 early Chinese paintings. In connection with the purchase, WT Art executed a promised gift agreement with the Metropolitan Museum of Art (the Met) for the same group of paintings.

In this Wealth Management article, Diana Wierbicki, chair of Loeb’s Art & Cultural Property practice, and associate Kenley Stark discuss the U.S. Tax Court’s decision in WT Art Partnership LP v. Commissioner, which upheld charitable deductions for donated Chinese paintings under the “reasonable cause” exception despite unqualified appraisals, while also highlighting the need for thorough valuation analysis.

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