Important Changes to Form 8283
The IRS just issued a new Form 8283 with new instructions. A close read will reveal some important changes for land trusts. See what the new instructions state below. If you have followed the tax cases, then these changes won’t surprise you.
- That the taxpayer must either: “…describe the easement terms in detail, or attach a copy of the easement deed.” Experts have been advising that the landowner attach the conservation easement to Form 8283 for a few years. Now the IRS is requiring that or a detailed explanation.
- That “If you use appraisals by more than one appraiser, or if two or more appraisers contribute to a single appraisal, all the appraisers must sign the appraisal and Part III of Form 8283.” This was a source of pain and confusion in the past few years with some deductions fully disallowed because not all the contributing appraisers signed the 8283. Please note that all the contributing appraisers should also sign the appraisal too.
- That appraisers must declare that they “perform appraisals on a regular basis”.
- That you must clarify which “basis” you are reporting. This allows the IRS to compare the basis of asset with the claimed FMV of gift. Presumably if the IRS examiner feels the spread is too large then the return is flagged for an audit.
This is not an exhaustive inventory of changes, just a few of the highlights, and is not legal, tax or other advice. Please read the Form and the Instructions carefully with your attorney or tax professional. The revised form is dated December 2012 so may affect your year-end closings. Please consult with your attorney regarding effective dates. The IRS last revised Form 8283 in 2006 according to the IRS website.