Estate Taxes

My opinion would rely first on question -- is there sufficient value here that the estate is over the exclusionary amount so there is any tax liability, anyway? And, if so, is the value of these items sufficient to reduce it that significantly?

As for eBay being an acceptable arbiter of value, if the items were of much value one wouldn't think there would be very many for comparison purposes being sold, so that validates at least somewhat in my mind that they're probably not that valuable. I'd want more than 2/3 closed sales and demonstrable that they really are the same items in similar condition before going that route. The question also would be as to whether there is indeed more value in the items as a collection rather than individual pieces or there is a single piece in the collection that is 90% (say) of the value of the entire collection. Far too many variables to assess.

If the questions in the first paragraph have a positive response, I'd suggest another appraiser be asked for an opinion on those items. To do that doesn't require "removing" them from the estate, simply asking for a second opinion.

Oh, another thought--does the present appraiser have some vested interest in the value being high?

As for the disposal questions, I'm not aware enough of the legal ramifications to even speculate -- you need a legal opinion there from whoever is handling the estate--if it's large enough this is a real tax question, there must be somebody involved, not a "diy-er".

Can't speak to the rest of what you raised, dpb has done a good job overall, but generally Goodwill, Salvation Army etc. won't deliver an estimate of value for you. They'll provide a receipt but the valuation is something they stay away from.

The only additional comment is that common sense should come into play. Are the appraised values high or low relative to what? Opinions? Based on? Fair Market Value (or "worth") is what a knowledgeable and willing buyer pays a knowledgeable and willing seller.

The other point raised by dbp is very vaild. If the entire amount of the esate is below the exclusion level, unless your state weighs heavy on taxation, is it 'worth' getting "into" it with the appraiser?

Your right - it may not be worth getting into it with the appraiser. We are over the exclusion limit, so ther will be a tax bill to pay. To that extent, there is a desire to reduce the tax bill, but it's a smuch the principle of the situation as anything else. I've got a set of Civil War books, the appraiser says is worth $1500. I can see the same set on eBay for $250. I don't have the time or inclination to find this elusive market where people will pay $1500 for these books, but it seems I'm really at the mercy of the appraiser for the value. No, I don't believe he has any vested interest in pricing them too high. In all, it seems we could challenge maybe $3 - $4K in value, saving 45% in taxes. Not a significant amount as far the whole estate is concerned, but the $1500 or so in savings is a pretty good hourly wage for me if it can be saved.

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snipped-for-privacy@triad.rr.com wrote: ...

... Don't see why you're hostage to the appraiser if you have valid other data (how comparable the eBay listings are to what you have would be at least one question as previously noted), but he has an opinion; you have an opinion.

The executor should be able to decide whose data to use in compiling the information for the estate return--don't see there's any reason you would have to use the appraiser's figures alone.

Again, whether there's sufficient to be saved for the trouble is another call.

Save that page in your records, maybe even print it out as HTML pages saved to your disk don't always display correctly, if you want to use the lower appraisal value. Also, why not talk to your appraiser about it? If I'm not mistaken, the fees you pay to appraise are deductible from the estate, so I'm wondering if you don't use his/her appraisals for all items, then do you still get to deduct the appraisal fee.

If the estate is going to use a different number than the appraiser's then they should file a form 8275 indicating it is taking a position contrary that has less than a 1/3 chance of being upheld. On the one hand the IRS and the court has a qualified appraiser with a qualified appraisal. On the other it has a page from eBay with no information on how knowledgeable the eBay seller is, what it will ultimately sell for, the comparable conditions of the appraised items, etc. One data point on eBay and a wealth of experience on the other. Who do you think the IRS and the Courts will believe. To overcome the appraiser I think you need another appraiser to come in. Not worth the fees I would think. Also not worth it to file the form 8275. I am not saying the appraiser is right, we all make mistakes, but an eBay auction is insufficient data to overcome a qualified appraisal.

OP doesn't, as I recall, explain where this appraiser came from. In California estates in probate are required to be appraised by someone known as a "probate referee." Many if not most of these referees are not appraisers, and really don't know what they're doing. If you want an appraisal for tax purposes, you should get a qualified appraiser.

If push comes to shove the issue will be demonstrating sufficient evidence to support your value. If you have seen the same thing (in about the same condition) actually sell at eBay for a specific price, I suspect that might be sufficient. But if there were five and four sold at a much higher price, you could have a problem.

Stu

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Yeah, should have noted that I was referring only to experience in a state in which they don't have such requirements -- it's only got to be reasonable-enough that it passes the muster of the probate judge as not being obviously falsified.

Yeah, it would require whatever level of proof required for the jurisdiction -- an outlier would undoubtedly weaken the case.

It still seems unlikely to me there would be very many of something that was of actual real value on sale on eBay, anyway...but, I guess that isn't necessarily so--I've bought some moderately expensive heavy equipment that way, but never even look at collectibles so that's out of my knowledge base.

On one hand, a supposed expert who claims a value (but certainly wouldn't pay anything like that).

On the other hand, an actual sale by auction, meeting the definition of Fair Market Value.

I would believe reality in preference to a so-called expert, unless the expert is willing to back up his claim with cash (e.g. if he won't buy it for $1,000, how credible is his claim that it's worth $1,500?)

Seth

One sale is not fair market value. How do you know the eBay seller isn't desperate for cash? How do you know they aren't an idiot (no insult intended to the eBay seller). You don't. Your term "supposed expert" is an insult to all qualified appraisers. Obviously you haven't spent any time reading court opinions and IRS rulings about how they view appraisers opinions versus other data.

Reality? One data point versus a qualified appraiser's years of experience. Get 20 actual sales from eBay and then come back. Even then you can't compare the conditions which a qualified appraiser would do. Why does the appraiser have to be willing to buy it for his/her opinion to be correct? Unless the appraiser is in the business of buying and selling used books or was a collector of such books why would he want to buy it and then have to deal with the hassle of selling it?

Drew Edmundson, CPA Cary, NC

Drew wrote: ...

OTOH, if there are a number of the same item(s) available for auction on eBay, that tends to discount that these would be highly valuable items.

Whether the value is at or near the appraiser's assigned value would seem questionable if there is such a large discrepancy w/o other compensating factors which aren't given.

What is there to say the particular appraiser in question is "qualified" and are there no appraisers who simply aren't very good? would be a counter argument...

I don't doubt that if the question became an issue in court that there would be a significant prejudice towards an appraiser's estimate to overcome.

There are bad appraisers just like there are bad CPAs, attorneys, engineers, doctors, programmers, hamburger flippers, etc. To overcome the appraiser's value you have to prove that he is wrong and one data point isn't going to do it. How do we even know the eBay seller actually has these books? We don't.

Do I know if this appraiser is qualified, no I don't, but I am going to make the assumption that the OP didn't just ask a drinking buddy but hired a licensed appraiser. So until someone can prove he/she is not qualified I am going to believe so. One eBay posting for sale doesn't do it. I am not a big eBay shopper but I have seen prices all over the place for the same thing. So how do I know that the CPU is worth $X when I see it offered for $5 to $150? Heck I see people selling used books on Amazon for twice Amazon's price for new. Where do they get off doing that and who is overpaying?

Drew Edmundson, CPA Cary, NC

My first step would have been to ask the appraiser to look at the eBay posting and any other evidence I had and politely asked him to reconsider his opinion. But if he wouldn't change his mind then I would use his value or pay for another appraisal (only if cost effective). Perhaps the OP has already done this and not gotten satisfaction.

Drew Edmundson, CPA Cary, NC

Maybe the eBay seller was desperate for cash, but that's part of FMV. The market of sellers includes people who want to make a profit and put their money into new investments, people who want to sell stuff to pay for college, people who want to sell stuff because they need to pay for heat, etc. Whatever the underlying motive, that's irrelevant; the bottom line is that the price they sell for is FMV. Simarly, when I sell stock I own because I need to pay for something (whether it's for a wedding, to pay a tax bill, whatever), the only thing that matters for tax purposes is the price I sold it at.

No it isn't.

1.170A-1(c)(2) "The fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts." Note "no compulsion" in the regulation. So motive is a key element. The law is the law and telling me how the law should be doesn't help. But you have gone off on a tangent. Appraisal from a qualified appraiser trumps an eBay listing. That is just the way it is. If you don't like the appraisal then get another expert to tell you the first appraiser is wrong or gather a whole lot of other evidence than just a random eBay listing (no insult intended to the OP).

Drew Edmundson, CPA Cary, NC

What about an eBay _sale_? The eBay sale meets the definition in the regulations, and I don't see anything in the quoted regulations about a qualified appraiser trumping the definition.

I agree that the listing is irrelevant; I know lots of cases where someone listed an item for a low price in order to attract interest, and expected it to sell for much more (and did get an order of magnitude more than the mininum).

Seth

Seth wrote: ...

... Just having sold it doesn't remove the possibility of a compulsory sale by the buyer -- he _could_ be willing to accept anything if in a pinch.

The expert appraiser trumps the regulation in the eyes of probate court in some states apparently from earlier posts.

I agree it would need a fairly sizable sample population of completed auctions to have any chance of setting a FMV at significant variance to an expert appraiser's estimate if it came to that in the process of probate -- but that doesn't say it isn't possible still the appraiser is over-estimating for a multitude of reasons.

Where I see the practical difficulty in stuff like this is that ime appraisers tend to have experience in what I'll term "high end" markets whereas an "every day" estate auction is likely to only bring in small fractions of what some items might bring if there were the time and inclination to market them to precisely the right outlet or in a location (particularly larger population centers) where there could be more demand.

imo, $0.02, etc., ...

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Just had to jump in. EBAY ss not the place to look for Fair Market Value in books. d a Google for ABE books, you might be surprised. Our Friends of the Library uses it to sell hundreds of books per month.

No auction just buying and selling at what ever the market will bear, Anne