Q: For nonprofits, is there any special tax procedure in regard to very high-value In-kind donations?

A: For nonprofits receiving high-value non-cash (in-kind) donations, there are some special considerations and procedures to follow:

1. Acknowledgment: The nonprofit should provide a written acknowledgment to the donor, describing the donated property and specifying whether any goods or services were provided in exchange for the donation.

2. Appraisal: Generally, it is the donor's responsibility to obtain a qualified appraisal for donated property valued at more than $5,000. However, even if the donor chooses not to claim a deduction, it is still a good practice for the nonprofit to obtain an independent appraisal for its own records and to substantiate the value reported on its tax returns.

3. Form 8283: If the donor were claiming a deduction, they would need to complete Form 8283 (Noncash Charitable Contributions) and attach it to their tax return for donations valued at more than $500. However, since the donor is not claiming a deduction, this form is not required in your case.

4. IRS Form 990: As you mentioned, you will need to report the value of the donated paintings on Schedule M of your organization's Form 990. The value reported should be based on a qualified appraisal or other reliable valuation method.

5. Disposition of donated property: If your nonprofit sells, exchanges, or otherwise disposes of the donated property within three years of the donation, you may need to file Form 8282 (Donee Information Return) and provide a copy to the donor.

While the donor's choice not to claim a deduction simplifies some aspects of the process, it is still advisable to obtain an appraisal and maintain thorough records of the donation for your organization's own tax and accounting purposes. Consult with a tax professional familiar with nonprofit tax law to ensure compliance with all relevant regulations.