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A fair market valuation is used to assign the value of an asset.

The Fair Market Valuation Form must be submitted on a yearly basis. Valuation of assets in a self-directed account must be provided to The Entrust Group, Inc. (“Entrust”) to ensure proper tax reporting to the
Internal Revenue Service (IRS).

An appraisal must be submitted in addition to the Fair Market Valuation Form to change the value of an asset when:

  • Taking an in-kind asset distribution 
  • Converting an asset
  • Recharacterizing of an asset

Entrust is required to:

  • Provide the fair market value (FMV) of your account as of December 31 of each year to the IRS
  • Provide the account owner Form 5498 with the same FMV information for the account

To properly report the FMV of an asset, a qualified, independent third party should perform the valuation and then complete the Fair Market Valuation Form. A qualified, independent third party may be a:

  • Certified Appraiser
  • Licensed Real Estate Professional (such as Broker/real estate agent)
  • Knowledgeable Party (such as CPA, Attorney, Financial Planner, etc. who is strictly at “arms length” to both you and the investment)

Important Guidelines:

  • The Fair Market Valuation Form must be signed and dated by you
  • If an appraisal is required, the appraiser does not have to sign the form; the appraisal report is sufficient
  • If an appraisal is not required, the third party valuator must also sign and date the form
  • The form must be sent to Entrust with supporting documents
  • A separate Fair Market Valuation Form must be completed for each asset held in your account

For more information and frequently asked questions, download our free guide to Real Estate Fair Market Valuations.

 

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Fair Market Value FAQs

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Fair Market Valuation