BV Law News, w
A highlight at the 2015 AICPA forensic and valuation services conference in Las Vegas was “Valuation in Tax,” a panel in which several leading minds on taxation discussed hot topics in the valuation area. The star of the illustrious gathering was Judge David Laro. He offered thoughts on a range of issues, including tax affecting, USPAP, standard of value, discount for lack of marketability, concurrent witness testimony (aka “hot tubbing”), and more.
For example, in terms of the standard of value, Judge Laro reminded experts that one thing they can do to ensure their testimony is admissible is using the correct standard of value. It’s the fair market value, not the market value. In other words, the focus is on a hypothetical willing buyer and a hypothetical willing seller that engage in an arm’s-length transaction; the focus is not on actual sales data, he cautions. If an expert applies the wrong standard of value, he or she can be sure the Tax Court will disregard the valuation. Today’s Tax Court judges are very sophisticated when it comes to valuation, Judge Laro added.
To read more about his hot topics discussion, click here.
On October 19, 2015, Theresa Melchiorre, chief counsel for the IRS, gave a presentation at the American Society of Appraisers’ 2015 BV Conference, entitled “Appraisers and their Responsibilities : An IRS Perspective.” As part of the presentation, she discussed seven common reasons for auditing a business appraisal associated with a gift tax or estate tax return.
- The appraisal does not address the applicable Code and Regulations.
- The appraisal does not conform to generally accepted standards and procedures.
- The appraisal relies on unconventional analysis (i.e., not widely used or accepted).
- The analysis is not thorough, explained or consistent with the valuation conclusion.
- The conclusions are based on unsupported opinion and not facts.
- The assumptions made in the appraisal are not reasonable and supported by evidence.
- The appraisal is poorly written. It is not easy to follow, does not answer potential questions or does not lead to a reasonably supported value.
For many estate and gift tax attorneys (and their financial advisors), most of the following “red flags” will not be cause for surprise but should underscore the importance of issues that require continued professional oversight and appraisal expertise. Tax rules, regulations and compliance are constantly evolving. With South Park Advisors, you can be assured you’ll receive a professional business valuation that can withstand scrutiny and review.
Paula Okonneh hosted Rob Snowden, managing director of South Park Advisors, on Chatting with the Experts, a show that interviews entrepreneurs about their successes and challenges. In the interview, Rob talks about what drove him to start South Park Advisors, his passion for business valuation and some of the latest research regarding the S-Corp/C-Corp valuation controversy.
You can listen to the podcast at Chatting with the Experts.
Stop by for a visit!
South Park Advisors is pleased to announce its participation in the North Carolina Bar Association’s 36th Annual Estate Planning and Fiduciary Law Program to be held at the Kiawah Island Golf Resort from July 30 to August 1.
Please stop by for a visit and let us provide our perspective on the latest trends affecting business valuation in the estate planning arena.