How long is an appraisal good for for gift tax purposes?

An appraisal for gift tax purposes doesn't come with a printed expiration date, but it only protects you if two things line up: the valuation reflects fair market value at or very near the actual date of the gift, and the appraisal is attached to a properly and adequately disclosed federal gift tax return (Form 709). Get both right and you start a three-year clock on the IRS's ability to challenge the value. Miss either one, and the valuation can stay open to challenge indefinitely.

Two Different Clocks Run on a Gift Tax Appraisal

Before the gift, the valuation has to track the transfer date. The appraisal needs to state fair market value as of, or very close to, the date the gift is actually made. For interests in a closely held business, LLC, or family limited partnership, value moves with financial performance, market comparables, and industry conditions, so an appraisal completed months before the transfer may no longer reflect reality by the time the gift happens. If the transfer is delayed, it's worth asking whether the valuation still holds up or needs to be refreshed.

After the gift, the return's disclosure determines the challenge window. Once the appraisal is attached to a gift tax return that meets the IRS's adequate disclosure standard, that value is protected by a three-year statute of limitations under 26 CFR 301.6501(c)-1. If the IRS doesn't challenge the value within three years of filing, it becomes final, both for gift tax and for the estate tax return filed at the donor's death, since lifetime gift values carry forward into that later calculation.

What "Adequate Disclosure" Actually Requires on Form 709

The three-year clock only starts if the return is adequately disclosed. Per the Instructions for Form 709 and the underlying Treasury regulations, adequate disclosure generally requires the return (or an attached statement) to include:

A description of the transferred property and the transaction, including the valuation method used to reach the reported value
The identity of, and relationship between, the donor, the recipient, and any other parties involved in the transaction
For gifts of interests in a family business, LLC, partnership, or trust, a description of the entity and the specific rights and restrictions attached to the transferred interest
A qualified appraisal, or a detailed written statement covering the valuation method, the financial data relied on, and any discounts applied, such as those for lack of marketability or a minority (non-controlling) interest
The appraiser's qualifications, including relevant credentials and experience, and any relationship between the appraiser and the donor

This matters most for gifts of closely held business interests, membership units, or family limited partnership shares, where valuation discounts are common and where the special valuation rules under Internal Revenue Code Sections 2701 and 2702 impose their own disclosure requirements on top of the general rule. A thin or informal valuation statement rarely satisfies this standard; a full written appraisal, prepared in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP), gives the disclosure far more weight if the IRS ever looks at the return.

What Happens if the IRS Challenges the Value Within the Three Years

If the return is adequately disclosed, the IRS still has three years from the filing date to open an examination and challenge the reported value. In practice, that means requesting the appraiser's work file, questioning the discounts applied, or bringing in its own valuation analyst to argue for a different number. A well-documented appraisal, one that lays out the methodology, the comparable data, and the reasoning behind any discounts, is the strongest defense in that scenario. Once the three years pass without a challenge, the value is locked in.

Undisclosed or Incomplete Gifts Have No Time Limit

If a gift isn't reported at all, or the return omits the information needed to meet the adequate disclosure standard, the statute of limitations never starts running. Under 26 CFR 301.6501(c)-1, the IRS can revisit an inadequately disclosed transfer's value at any time, including years later when the donor's estate tax return (Form 706) is filed and the lifetime gift is pulled back into the estate tax calculation. This is the single biggest reason to treat the appraisal and the disclosure statement as inseparable: a strong appraisal attached to a thin or incomplete return still leaves the value exposed indefinitely.

Keep the Appraisal and the Return Indefinitely, Not Just Three Years

Even after the three-year window closes on a given gift, hold onto the appraisal, the filed Form 709, and all supporting documentation for as long as the donor is alive and afterward. Every lifetime gift reduces the donor's remaining unified estate and gift tax exemption, so prior gift values feed directly into the exemption calculation on the eventual estate tax return. Losing the paperwork doesn't erase the gift, it just makes it harder to prove what was already settled.

A few related questions come up alongside this one:

Gift Tax Appraisal prepares USPAP-compliant valuations of business interests, LLC and partnership units, and trust holdings for lifetime gifts. Our appraisers hold credentials with organizations such as the ASA, the CFA Institute, and AICPA's Accredited in Business Valuation (ABV) program. If you're planning a gift and need a valuation timed to the transfer date, request an appraisal to get started.