How do you determine the value of gifted property?

Fair market value on the date of the gift is the standard, defined as the price a willing buyer and willing seller would agree to, with neither under any compulsion and both having reasonable knowledge of the relevant facts.

For most gifts of significant value, meaning real estate, closely held business interests, or unique assets like art or collectibles, that determination requires a qualified appraisal rather than a personal estimate or a rough guess based on purchase price. Our appraisers apply the valuation approach appropriate to the asset. This typically means the market approach (comparing recent sales of similar property), the income approach (capitalizing expected future cash flows or earnings, common for operating businesses), or the asset approach, depending on what the underlying property actually is. Where applicable, the report also documents and justifies any discounts, such as those for lack of control or lack of marketability, that affect the value of a fractional or minority interest.

A defensible gift tax valuation report will typically include:

• A description of the property or interest transferred, including ownership percentage if applicable
• The effective valuation date, matching the date the gift was made
• The valuation approaches used and the reasoning behind that selection
• Supporting financial data, market evidence, and calculations
• Any discounts or premiums applied, with justification

This documentation matters most if the gift's value exceeds the annual exclusion or draws on lifetime exemption, since that triggers a Form 709 filing where a well-supported valuation protects you against later IRS challenge. We prepare gift tax valuations in accordance with USPAP and IRS requirements, tailored to the asset type and intended use. For more on how gift value interacts with your filing obligations, see how gifts are valued for tax purposes, or request a valuation to get started.