Equipment Appraisal Blog | Understanding Machinery Appraisals

How does a donation appraisal work and how can it benefit your finances?

Posted by Equipment Appraisal Services on Tue, Mar 27, 2018 @ 12:27 PM

When you're trying to help out a community organization or charity, a donation of equipment can be a great way to help fill their coffers or provide them with equipment that moves their mission forward. However, when it comes time to deal with finances and taxes, sometimes you need to have a bit more paperwork available than a receipt from the organization in question to document value. During those times, a donation appraisal is often the best way to verify value and provide documentation for tax agencies to back up that value. Here's a quick overview of how the donation valuation process works and in what situations it's most necessary.

How does a donation appraisal work and how can it benefit your finances?

With the changes that have happened recently in the tax code and new tax reform bill, many businesses are concerned about how their donations to charities will work out financially in the future. Fortunately, many of the issues surrounding donations are still somewhat similar to past years. However, if you're considering trying the new tactic of bunching your donation of a large value of equipment into a single year and then coasting through the next several years before your next donation, you'll need to make sure you're able to solidly document the value of your equipment.

But what about tax agencies? If the equipment you're donating is $5,000 or more in value, the IRS requires that you have an appropriate appraisal performed to document the value. What's considered an appropriate or qualified appraisal? Most tax agencies, not just the IRS, will happily accept an equipment appraisal that is performed by a certified appraiser. Why? Because this type of appraisal uses a set of standardized methodologies that have already been tested in a wide range of situations. This means that they've been perfected into methodologies that are accepted by tax agencies, financial institutions, legal circles and insurance companies.

What if you have already donated the equipment during this past year in anticipation of the new tax laws? If you didn't have the opportunity to have the machinery appraised at the time, it's not too late to have an appraisal performed. The methodologies that were mentioned earlier include developing calculations that work well for past values. These values have been used in a wide range of other situations, including insurance losses due to natural disasters, changing market conditions and similar situations. This allows a certified equipment appraiser to look back through time to the situation and conditions under which the donations took place as well as any mitigating circumstances such as cost of removing the equipment from your facility and who bore the burden of that expense.

If the machinery you're donating has a value anywhere near where the cutoffs for the tax agencies you're dealing with, a donation appraisal is a vital part of the process. Fortunately, when you're working with a certified equipment appraiser, you can even have the equipment you've already donated appraised as of the date of its donation, making it easier to deal with tax agency issues that you may have missed at the time of the donation. Working with a certified appraiser ensures that the methodology used in calculating value will be accepted by tax agencies and courts of law if necessary.

Tags: donation appraisal, equipment donations, IRS 8283 form

What should you look for in a high-quality equipment appraisal firm?

Posted by Equipment Appraisal Services on Tue, Mar 20, 2018 @ 03:03 PM

When you need to have your equipment valued, what do you need to look for in an equipment appraisal firm? If you're not sure, you're not alone. A lot of companies and individuals who want to have their equipment valued don't know what to look for in an appraisal firm. Here's a quick look at some of the traits you should look for before hiring a machinery appraisal firm to document your equipment values.

What should you look for in a high-quality equipment appraisal firm?

At first glance, it can seem as though you already have a wide number of resources available to determine the value of your equipment. You can find similar equipment for sale in a sales flier and base your equipment values off of that value. You could go down to your local equipment dealer and ask for an estimate on trade-in value for your machinery. You could go to a few auctions and see what similar equipment sells for to get a better idea of what the market will bear. These will give you values for your equipment.

However, they're not going to give you an accurate value for your machinery.

When you hire a company to appraise your equipment, you're not trying to get someone's pie-in-the-sky figure that they'll hope they can get for your equipment. Your equipment value shouldn't be based on whether your equipment dealer is trying to convince you that the equipment you have is worthless or if they're willing to give you more than your equipment is worth to push one more sale for the quarter. Your equipment isn't being sold as a last option to raise a little cash, unlike the machinery you'll see at auction.

When you're getting ready to have your equipment appraised, you'll want to look for a certified equipment appraiser who has experience in your industry. Why this particular combination? 

A certified equipment appraiser has gone through a lot of education and experience to become certified. They've learned a great deal, not only about the machinery that they are appraising, but also about the practice of appraisal. They are able to determine exactly which type of value needs to be calculated for your specific situation, whether you need to sell equipment quickly due to a death or disability of the equipment owner, wait for the right price from the right buyer or just record the equipment's value for insurance, donation, tax or other purposes.

An appraiser who has experience in your industry not only deals with equipment on a daily basis, but deals with equipment that is specifically like yours on a daily basis. This gives them a level of familiarity with what your machinery is, how it operates and what to look for in terms of performance, expected useful lifespan and wear. With this knowledge, they can make a solid calculation of your equipment's value.

By hiring a good equipment appraisal firm, you can be assured that the machinery values you're provided with are accurate. You'll know that value will hold up well against strong scrutiny in a wide range of situations. Those values will give you a solid background for your accounting books and a good place to negotiate from when selling that machinery. When you hire a quality valuation company, the benefits you receive will last for years to come.

Tags: accredited appraisers, equipment appraisal firms, certified appraisal

What Do You Need to Know for a Personal Property Tax Appeal?

Posted by Equipment Appraisal Services on Tue, Mar 13, 2018 @ 09:52 AM

Most people have come to expect the arrival of their personal property tax bill every year. But every year, there's always a few who get an unpleasant surprise. Sticker shock is rough enough, but when it's on your property tax assessment, it can be even more alarming. Fortunately, you do have alternatives to paying a too-high assessment. Here's a quick overview of what you should expect when you go through a personal property tax appeal.


What Do You Need to Know for a Personal Property Tax Appeal?

  1. Start the process. In most situations, directions for starting the appeal process is included with the tax bill. If it isn't, it can be as simple as calling the tax agency's number to learn how the process is handled. In either situation, start the process as quickly as possible to ensure you'll be able to clear the problem up sooner.
  2. Find what documentation you already have available. If the property is new this year, it's fairly easy for it to be mistaken for another model, trim level or other easily verified error, which can lead to an incorrect assessment. In that situation, you may be able to prove the equipment's value from the invoice. However, if it's had any use at all, you may want to consider that the value may have already dropped, much like when a truck leaves the dealer's lot with the new owner.
  3. Consider whether that documentation represents an accurate value. If it's new equipment that had any use at all, you may want to consider that the value may have already dropped, much like when a truck leaves the dealer's lot with the new owner. In addition, if the equipment has been used hard, it may have already depreciated in value enough that even a reasonable tax assessment may be much higher than the equipment's actual value.
  4. Get a certified appraisal report. If you can't come up with any documentation of the value, or if you feel that the value may have changed since that documentation was produced, your next option is to get an appraisal performed. However, you'll want to make sure the individual performing the appraisal has experience working with that type of equipment - after all, the tax assessor who first determined the value used by the tax office deals with a wide range of property, but usually doesn't have the specialized knowledge to deal with the variances in particular equipment types.
  5. Send or bring your documentation to the tax agency for the appeal. Once you have your documentation in hand, present it to the tax agency in the manner recommended in their appeal process. If you're providing an appraisal report, make sure that it's from a certified appraiser who knows what methodologies to apply in your case.

By taking the time to fight a bad personal property tax appeal, you're protecting your bottom line. If you do need to have an appraisal performed on your equipment, please remember to have it performed by a certified appraiser. The certification process provides the appraiser with the knowledge and expertise to use the right methodologies for your case, methodologies that have been proven in a wide range of situations, including personal property taxes. When you follow these simple steps, your bad appraisal can soon be a thing of the past.

Tags: personal property tax, tangible personal property, property tax appeals

Fight a bad tax appraisal with a certified equipment valuation

Posted by Equipment Appraisal Services on Tue, Mar 06, 2018 @ 01:35 PM

When it comes to life, there are two things that are certain: death and taxes. However, just because you need to pay taxes doesn't mean you should just pay a bad tax appraisal that reflects too high a value for your machinery without a fight. But when it comes time to appeal your bad tax assessment, how will you verify the value of your machinery? With a certified equipment appraisal. Here's why it's important to use one to build your case.

Fight a bad tax appraisal with a certified equipment valuation

You know it's coming, at the same time as it does every year - property taxes. If you own significant machinery, it can seem almost inevitable that you'll be paying a high amount for your taxes again this year. But when you look at the appraised value of your equipment, is that value in line with what the equipment is actually worth?

Tax appraisers and assessors spend a lot of time trying to figure out the value of a wide range of items, from real estate to industrial machinery to the car you drive every day. Unfortunately, this means that they're not always very accurate when assessing something that's different from what they see on a daily basis. It's probably pretty common for a property tax assessor to determine the value of a compact sedan or a three bedroom, two bath house. But the equipment that is your company's livelihood is usually much more rare. This can cause serious problems when it's time for the tax assessment.

The appraiser may make a mistake by assuming that your equipment is in better or worse shape than the reality of the situation. You may have a beaten backhoe that was appraised on book value even though it's been through two floods and had significant damage from a tumble down a steep embankment last year. You could also run into issues when an assessor thinks that you have a 48 HP tractor instead of the much lighter-weight 18 HP tractor that is only worth half as much. Issues like these should not be allowed to stand and should be challenged through an appeal.

But how do you provide verification of what your equipment is actually worth? One of the best methods is to have a certified equipment appraiser prepare an appraisal report on that machinery. An equipment appraiser deals with machinery all day long, providing them with a strong level of knowledge and experience on the equipment in question. This also means they can easily tell the amount of wear your equipment has received over the years, allowing them to best appraise how that wear has impacted its value. Because a certified appraiser goes through a certain amount of education and experience, they use standardized methodologies that have been tested in tax agency circles for years.

By taking the time to get a certified equipment valuation, you can fight a bad tax appraisal and win. But beyond a simple property tax appeal, you can gain additional benefits from your valuation, including verifying value for insurance claims, providing proof of value for a sale, documenting machinery condition and similar areas of concern. Make sure you work with a certified equipment appraiser to ensure you'll get an accurate appraisal that will provide you with significant benefits.

Tags: property tax, property tax appeals, tax appraisal