IRS’ increased scrutiny of noncontrolling ownership interest valuations calls for additional analyses
In his recent article “The Consideration of Projected Income in the Valuation of Noncontrolling Ownership Interests,” Timothy J. Meinhart (Willamette Management Associates) says “most valuations of nonmarketable, noncontrolling ownership interests in family holding entities are prepared using only one valuation approach—the asset-based approach.” However, appraisers often ignore the projected income associated with the subject noncontrolling ownership [...]
What kinds of actions are the IRS taking against appraisers? None, at least as of this week…
There are none against business appraisers as this date, under the vague and far reaching terms of Circular 230. ”Most are against real property people, doing conversation easements,” said Karen Hawkins, head of the IRS’ Office of Professional Responsibility. “We have appraisers doing creative things with hunting trophies and things like that.” Hawkins says that [...]
What kinds of actions are the IRS taking against appraisers
There are none against business appraisers as this date, under the vague and far reaching terms of Circular 230. ”Most are against real property people, doing conversation easements,” said Karen Hawkins, head of the IRS’ Office of Professional Responsibility. “We have appraisers doing creative things with hunting trophies and things like that.” Hawkins says that [...]
Non-compete vs. personal goodwill: whose asset is it anyway?
In 1980, Larry Howard, DDS, incorporated his practice, becoming the sole shareholder, officer, and director. He also entered a covenant not to compete (in effect, protecting his company from himself). Whatever his objective, when he retired in 2002 and sold his practice to another “corporate” dentist, the parties’ purchase agreement allocated nearly $550,000 to Dr. [...]
IRS valuation leader roundtable leads off 3rd Annual Tax and Valuation Summit in November
In their only joint public meeting this year, three of the most important leaders from the Internal Revenue Service will discuss the implementation, enforcement, and appeals of Service regulations at the Advanced Summit on Business Valuation: Resolving Tax & Legal Issues, presented by BVR and Georgetown School of Law. Moderated by Jay Fishman, an expert appraiser [...]
New insight in estate and gift tax valuation
Look for 2010 edition of BVR’s Guide to Business Valuation Issues in Estate and Gift Tax at this end of June. The Guide presents an update to issues such as tax-effecting S-Corporations, non-signing tax preparer penalties, and legal challenges from the IRS. Pre-order the Guide here
FMV’s Hoffman reveals unique aspects of highly-contested Ludwick case
A Tax Court case usually has a large dollar amount at stake or a divisive issue, and Ludwick v. Commissioner (reported in last week’s special edition BVWire™) tackled the long-contested application of valuation discounts to undivided half-interests in real property. “What made this case unique—and what certainly contributed to it reaching Judge Halpern—was a Tenancy [...]
CPE Opportunity: tiered partnership structures
Join William Frazier and John Porter in a webinar on valuation challenges borne of the increased use of FLPs and other ownership structures. “Valuing Tiered Partnership Structures” is today, Thursday, May 27th at 10:00 am PT/1:00 pm ET. For more information, or to register click here. Two CPE credits are available.
FLP experts take at in-depth look at complicated ownership arrangements
Discounts for lack of marketability and adjustments for minority interests are tough enough, but when the when limited partnership structures get complicated, with multiple ownership “tiers,” these adjustments can take on a life of their own. On May 27, William Frazier (Howard Frazier Barker Elliot) and John Porter (Baker Botts) will address these valuation challenges [...]
Veritas case challenges IRS position on transfer pricing valuations
Veritas Software Corp. v. Commissioner, 2009 WL 4723602 (U.S. Tax Court)(Dec. 10, 2009) After aggressively expanding in the 1990s, Veritas Software Corporation became the largest manufacturer of advanced storage management software, holding distribution agreements with leading original equipment manufacturers (OEMs), including Microsoft and HP. Typically, the OEMs bundled the Veritas software into their operating systems [...]
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