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, [...]
BV trivia question: Which Tax Court judge has taught quantitative analysis to lawyers? (Hint—think Peracchio)
More hints: In Peracchio v. Commissioner, (T.C. Memo 2003-280), the Tax Court wasn’t pleased with either expert’s determination of minority and marketability discounts for a family limited partnership (FLP) funded with over $2 million in cash and securities. In particular, the court criticized the taxpayers’ experts for using benchmark averages without examining and adjusting the [...]
‘Just say no’ to tax-affecting: Analysts respond
In last week’s BVWire, we quoted an IRS attorney as saying that he stood firm on the legal as well as IRS precedent that absolutely rejects tax-affecting the value of pass-through entities. As you might imagine, the remarks (the opinion of the speaker, not the IRS) generated some feedback from fellow panelists at the ASA [...]
Valuing life insurance policies can be problematic
In a recent Trusts and Estates blog post Melvin A. Warshaw (Financial Architects Partners) says “antiquated gift tax regulations create ambiguity in valuing certain types of newer policies that are sold today.” One example is in the case of gift taxes. Warshaw explains: The estate and gift tax regulations indicate that the value of a [...]
Laro and Pratt hit the market with their updated Business Valuation & Federal Taxation
This is the must-have text in the field from Judge David Laro and Shannon Pratt. Besides the essentials the 2nd Edition (the first came out in 2005) includes coverage of: Personal versus enterprise goodwill New materials on transfer pricing and customs valuations and how recent markets have affected both the income and market approaches Coverage [...]
Tax Court uses Daubert to take down appraisal expert
For several years, Judge David Laro has been warning the business appraisal community that some of its methodologies and techniques—in particular, its approach to calculating marketability discounts—might not pass muster under the federal Daubert standard for relevance and reliability. (See BVWire #85-2 and BVWire #72-3) Less than two weeks ago, the U.S. Tax Court decided [...]
Can the IRS subpoena your work papers, even after the taxpayers have paid the deficiency?
An Idaho couple claimed nearly $1.5 million as a charitable contribution deduction on their federal tax returns relating to the granting of a conservation easement. The IRS summoned the taxpayer’s appraiser to provide evidence related to the easement valuation, including all his work files. Based on advice of the taxpayer’s attorney, the appraiser refused the [...]
Sound valuation principles are still at the center of LC and LLP estate planning
While attending a recent conference on estate tax planning, Bob Buchanan (PCE Valuations) noted numerous conversations on the use of LPs and LLCs–and valuation was regularly mentioned as a vital part. “The change in the tax law does not impact the necessity of obtaining a well-reasoned, independent valuation,” says Buchanan. He also believes: “Valuation of [...]
BVR continues to provide valuation Insights
We’ve just posted new articles from Insights, the esteemed valuation quarterly published by Willamette Management Associates and provided exclusively to subscribers of BVResearch. The new content includes: Analysis and Observations Regarding the Keller v. United States Decision (Steve Akers) Estate Planning in Uncertain Times (John H. Draneas, Esq) Reallocating Wealth After Christiansen: A Fresh Look at Formula Clauses [...]
Practice advice for appraisers facing an IRS appeals process
Diane Ryan is the IRS’ Chief of Appeals. “I’d like to give you some practice tips you can use,” she said. speaking at BVR’s Tax and Valuation conference in DC this morning. “We see every kind of work stream in my office. It’s a fascinating place to be in tax because you see everything.” The [...]
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