Yet another tax reform proposal targets discounts for lack of marketability–at least for non-business assets
The latest tax reform proposal, which Rep. Jim McDermott (D-Wash.) introduced last month as the “Sensible Estate Tax Act of 2011,” would raise the maximum estate and gift tax rate to 55% and lower the applicable exclusion amount to $1 million. It would also eliminate valuation discounts on investment assets, such that: the value of any nonbusiness [...]
Judges: Tax Court door is ‘open’ to tax-affecting
Moderator Jay Fishman (Financial Research Associates) took on the “puzzling, controversial” topic of tax-affecting with the panel of Tax Court judges in Part III of BVR’s Tax Summit last Friday, hosted by Georgetown Univ. Law Center. Although none of the judges has presided over a case in which the issue came up—“I’m looking forward to it,” [...]
Does getting a business valuation mean a wealthier retirement for your clients?
It should–and this topic has been discussed recently on a number of business owner blogs. BVR isn’t aware of any data that proves this point–no Level I inputs that we’re aware of–but it seems that the type of business owner who would plan an exit strategy well enough to include valuations as part of [...]
Key takeaways from Turner and recent FLP cases
As we recently reported, the taxpayer in Estate of Turner failed to persuade the Tax Court to preserve the discounted value of a family limited partnership (FLP), due largely to the passive character of the transferred assets (marketable securities) and the partnership’s lack of any legitimate, non-tax business purpose, including any overriding investment philosophy. The takeaways [...]
Market says value of S Corps and C Corps differ, says Van Vleet
During the past 25 years, the number of S corporations and LLC’s has mushroomed from 750,000 IRS tax filings to about 6 million, according to Dan Van Vleet (Stout Risius Ross), who spoke at last week’s 2011 ASA Advanced BV Conference. During this same time, C Corp filings have declined from about 2.5 million to just [...]
Why would families destroy estate value, Judge Mark Holmes asks appraisers
“Why would a wealthy elderly lady willingly destroy half of the value of her estate,” Judge Mark Holmes of the US Tax Court just asked 200 appraisers at the LA Chapter of the Appraisal Institute’s IRS Valuation Summit last month. ”That’s the question you have to ask yourself when you’re trying to explain the transfer [...]
FLP valuations may be subject to increased scrutiny, T&E expert argues
“The smaller number of estate tax returns filed for deaths [occurring] in 2011 and 2012 will be subject to a heightened level of government scrutiny as IRS auditors comb through a declining inventory of returns to audit,” says Richard A. Behrendt (Robert W. Baird & Co.) in his article “Transfer of Interest in FLPs” (Trusts [...]
Lance Hall: It’s a great time for your clients to gift private equity
“Because not only do you not have to pay gift tax, but the discount for marketability has shot up, too,” Lance Hall (FMV Opinions) told the The Wall Street Journal, in the recent article, “How Volatility Eases Estate Planning.” The IRS generally allows a 30% to 35% discount on transfers of private company stock, the [...]
Discount for Lack of Marketability Job Aid for IRS Valuation Professionals available as free download from BVR
If you’d like a copy of the September 2009 Discount for Lack of Marketability Job Aid for IRS Valuation Professionals, created under the leadership of Mike Gregory and a number of other top IRS valuation experts, it’s now available at the free downloads page at BVR. It’s a must-read for any business appraiser who does [...]
Another blow to IRS: 9th Circuit upholds defined value clause
As reported in a prior ‘Wire, the Tax Court delivered a first blow to the IRS’s long-held opposition to formula-defined value clauses in Estate of Petter v. Commissioner. The government appealed, and just last week the 9th Circuit might have buried the “void for public policy” argument, as the IRS didn’t even assert this angle, [...]
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