## Facts

- Joseph and Shirley Mohamed donated multiple parcels of real estate in 2003 and 2004 to a charitable remainder unitrust (CRUT) that paid them income and left the remainder to charity.
- The Mohameds claimed charitable-contribution deductions for donated noncash property valued in the aggregate at many millions of dollars.
- For noncash contributions exceeding $5,000, I.R.C. § 170 and Treas. Reg. § 1.170A-13(c) required a timely “qualified appraisal” prepared by a “qualified appraiser,” with required reporting (including Form 8283).
- The Mohameds did not obtain independent appraisals by the return due dates; instead, Joseph Mohamed prepared valuation statements and completed Form 8283 without attaching a qualified appraisal.
- Mohamed was both the donor and, as trustee of the CRUT, effectively the donee, making him ineligible to be a “qualified appraiser” under the regulations.
- After an IRS audit began, the Mohameds obtained independent appraisals valuing the properties at amounts at least as high as, and in some instances higher than, the values reported on the returns.
- The Commissioner disallowed the deductions in full based on failure to satisfy the appraisal and reporting requirements, notwithstanding indications the donated property may have been undervalued on the returns.

## Issues

1. Whether the Mohameds satisfied I.R.C. § 170 and Treas. Reg. § 1.170A-13(c) by obtaining a timely qualified appraisal from a qualified appraiser and properly reporting the noncash contributions.
2. If not, whether later appraisals, substantial compliance, good faith, confusion about forms, or proof that the property was worth at least the claimed amounts could preserve any portion of the deductions.

## Decision

- The Tax Court held the Mohameds failed to obtain a timely qualified appraisal prepared by a qualified appraiser and failed to meet the substantiation and reporting requirements for the claimed noncash charitable-contribution deductions.
- The court ruled that post-audit appraisals did not cure the failure because they were not obtained within the regulatory time limits.
- The court rejected substantial-compliance and similar equitable arguments on these facts.
- The court sustained the Commissioner’s disallowance of the charitable-contribution deductions in full.

## Legal Principles

- For noncash charitable contributions exceeding $5,000, I.R.C. § 170 and Treas. Reg. § 1.170A-13(c) condition deductibility on strict substantiation, including a timely qualified appraisal and required return disclosures.
- A “qualified appraiser” must be independent; the donor and the donee (and parties to the transaction) are disqualified from serving as the appraiser.
- Appraisals obtained after the filing deadline generally do not satisfy the timing requirements for a “qualified appraisal.”
- Later proof that the donated property’s fair market value equaled or exceeded the amount claimed does not substitute for compliance with appraisal and reporting prerequisites.
- Substantial compliance does not apply when the taxpayer omits core requirements that are central to the statutory and regulatory substantiation scheme.

## Conclusion

The Tax Court denied the Mohameds’ noncash charitable-contribution deductions for real-estate donations to a CRUT because they failed to secure and report a timely qualified appraisal from a qualified appraiser, and later appraisals and evidence of value did not remedy that noncompliance.


Mohamed v. Commissioner, T.C. Memo. 2012-152 (2012)