Client has a second home that a charity is interested in purchasing. Client will receive cash that is about equal to his basis. The charity will provide him with a form 8283 from a certified appraiser with the fmv of the property being much higher than the cash he is receiving. According to the charity he will be able to claim a charitable deduction for the difference between the fmv and cash he is receiving. The fmv the charity is telling him that will appear on the 8283 is over 50% more than the his realtor and the city assessment says the house is worth.
I know if the IRS challenges this my client will be the one responsible for additional taxes, interest ,penalties . Anyone have this situation in the past? Any thoughts...concerns? I know the high appraisal is of concern to me. Thanks