“I plan to donate my archive and need an appraisal” is a statement I hear frequently as an appraiser. But before starting the valuation process, there are a series of questions to answer that determine if the expense of hiring a qualified appraiser is worthwhile for the donor. 

The following discussion can help you decide if an appraisal report is needed for your donated archival collection for tax deduction purposes in the United States. The end of the article also includes a few tips when seeking a donation appraisal.

Need clarification about donation appraisals in general?

Read the article “A Guide to Obtaining Art and Cultural Donation Appraisals.”

QuestionS to Consider

Are they your career papers?

If the records are from your work as a writer, artist, or other profession, your deduction is limited to the cost of materials for production. The result is often a modest monetary amount that would likely not exceed the cost of a qualified appraisal.

Why is there such a rule for self-created assets? Well, it was mainly in reaction to Nixon’s sizable tax deduction of his donated vice presidential papers. The controversy spurred the enactment of the Tax Reform Act of 1969. This ruling eliminated tax deductions by using fair market value for the living creator of their work and/or records. Instead, the creator is limited to deducting the actual cost of materials to make the items. 

In addition, paid work products made during the course of business (like memos, letters, reports, research files, proofs, galleys, or marketing materials) cannot be deducted in part due to the 1991 case Chronicle Publishing Co. v. Commissioner of Internal Revenue. The court ruled that The San Francisco Chronicle newspaper, which had donated millions of articles from its clippings library to a historical society, could not be deducted because the company’s cost basis was zero.

Where does that leave you with your career papers? Consider either leaving the archive as part of your estate so that your spouse and/or heirs benefit from a tax deduction or selling the collection in your lifetime.

Is the archive primarily comprised of your correspondence?

You cannot deduct the fair market value of your personally received letters, postcards, invitations, cards, etc. Since no financial transaction took place to acquire such correspondence, there is no cost basis. Therefore, it cannot be tax deducted despite being donated. 

However, let’s say you purchased or inherited other types of property that are also within the donated archive. Those items can be deducted and may be worth appraising. What should then be determined is whether these remaining items have enough collecting desirability to warrant an appraisal (usually a cumulative fair market value of $5,000 or more). 

Understandably, it can be difficult to know if what you have donated is monetarily valuable in the current marketplace. Discussing the situation with an appraiser may help you better determine it.  

Otherwise, consider either leaving the archive as part of your estate so that your spouse and/or heirs benefit from a tax deduction, or another possibility is to sell it in your lifetime. 

Were most of the items in the archive a gift?

Like the correspondence circumstance mentioned above, because you have been gifted the property, you have neither paid for nor inherited it. Once again, there is no cost basis; therefore, it cannot be tax deducted despite being donated.

If there are some items within the donated archive that you either purchased or inherited, they likely qualify for a tax deduction. Do these remaining items have enough collecting desirability to warrant an appraisal (usually a cumulative fair market value of $5,000 or more)? Understandably, it can be difficult to know what is valuable in the current marketplace. A discussion with an appraiser may provide guidance on the matter.  

So what can you do with your gifted items? Consider leaving the archive as part of your estate so that your spouse and/or heirs benefit from a tax deduction, or another possibility is to sell during your lifetime. 

Did you inherit the documents or records?

Good news: the archive has passed through probate. If the collection has a fair market value of $5,000 or more, a qualified appraisal is likely worth your while.

Unsure if the collection has substantial monetary value in the current marketplace? Set up an initial consultation with an appraiser to discuss details about the archive and your valuation goals.

Did you assemble the archive through purchases?

Good news: a qualified appraisal is likely worth your while if the collection likely has a fair market value of $5,000 or more. If you have been actively involved in buying items to form your archive, then you likely have a good sense of whether it meets this value threshold. A qualified appraiser will provide you with an objective appraisal report for its current fair market value in the most common marketplace of knowledgeable buyers and sellers, a context required by the IRS.

As a side note, it's important to have documentation of your acquisition costs, such as receipts, invoices, or an itemized inventory mentioning price, date, and source (see further discussion later in this article).

Other important factors when seeking an appraisal for a donated archive

Have an inventory of the collection

A comprehensive inventory of your collection helps reduce the time needed for an appraiser to examine its contents and, thereby, lowers the overall fee charged for services. This is especially true for archives with large quantities of items in the thousands (or even millions). An itemized listing also helps the receiving institution expedite the processing of the archive and subsequent public availability and use. 

Inventories may be in the form of Excel sheets, a pdf from a collection database system, log entries, etc. In some cases, the finding aid created by the donee organization can serve as the inventory if it’s available in time for the appraiser to utilize. 

Another option is to hire an independent archivist to arrange and describe the papers or records prior to donation. If interested in this route, the Society of American Archivists has an online directory to find an archival consultant. 

Ultimately, the more organized and detailed the archive is described before the appraisal process starts, the better for all involved.

Keep track of your purchases

If the collection was assembled by the donor through various purchases over the years, it is beneficial to have documentation of associated acquisition costs, such as copies of receipts or an inventory noting the price, date, and source of each purchase. 

“Geesh, why do I need to do that?” you may ask. The IRS requires the donor to explain the means of acquisition, which is how they determine your cost basis and allowed deduction. It must also be noted in the appraisal report. There will even be a section for you, the taxpayer, to fill out about acquisition in Form 8283 under Part I (last revised December 2023).

Involve your appraiser as soon as possible

Don’t wait until a month before you need to file your income tax return to contact an appraiser. The formal valuation of the collections takes time — from initial discussion to onsite examination, research market analysis, and finally, report development and delivery to the client. Professional appraisers will not accept a “rush job” since their reputation depends on the credibility of the final report. 

Obtain a written acknowledgment of the donation

According to IRS recordkeeping rules, a donor claiming a deduction of $250 or more is also required to obtain and keep a contemporaneous written acknowledgment (CWA) for a charitable contribution.

The IRS states, “To be contemporaneous, the written acknowledgment must generally be obtained by the donor no later than the date the donor files the return for the year the contribution is made. The written acknowledgment must state whether the donee provides any goods or services in consideration for the contribution” (Source: Topic no. 506, Charitable contributions)

Although there is no official format for the written acknowledgment, it should include the following information:

• Name of the receiving organization (i.e., the donee);

• Description of non-cash contribution;

• Statement that no goods or services were provided by the organization if that is the case; or

• Description and good faith estimate of the value of goods or services, if any, that the organization provided in return for the contribution; and

• Statement that goods or services, if any, that the organization provided in return for the contribution consisted entirely of intangible religious benefits if that was the case.

(Source: IRS Charitable Contributions: Written Acknowledgments)

Consider how the archive will be prepared for inspection

Will the appraiser's physical examination of the archive take place at a residence, warehouse, or institution? Are the storage boxes, flat files, and tubes accessible? Will there be sufficient lighting and heat/air conditioning? Is there a table for the appraiser to set up for taking photos and notes? Will someone be available to assist the appraiser in moving materials back and forth? These logistics are best worked out before the onsite visit takes place.

Please note the information in this article is for general informational purposes only and is not considered financial advice or a legal opinion. In addition, topics may not necessarily reflect the most current tax developments. Seek the advice of legal and financial professionals before acting upon any of the information included in this article.  

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About the Author: Courtney Ahlstrom Christy is the Principal Appraiser of Ahlstrom Appraisals LLC. She has worked with museums, libraries, auction houses, and galleries - all of which have provided unique opportunities to examine works ranging from the antique to the contemporary closely.