It is imperative for estate planners to engage valuation analysts that perform the proper procedures and follow best practices when performing valuations for gift and estate planning purposes. It is necessary to have a well-supported valuation because these reports are scrutinized by the IRS and may end up going to court. The recent decision by the U.S. Tax Court in Estate of Michael J. Jackson v. Commissioner provides several lessons and reminders for valuation analysts, and those that engage valuation analysts, to keep in mind when performing valuations for gift and estate planning purposes.
In this case, the parties raised the matter to appeals for two issues: 1) whether the trial court erred in awarding Wife alimony in futuro of $7,500 per month, and 2) whether Wife is entitled to attorney’s fees.
All fair market determinations involve assumptions regarding how buyers and sellers would behave in a transaction involving the subject asset. In a recent Tax Court case, the IRS appraiser applied a novel valuation rationale predicated on transactions that would occur involving assets other than the subject interests being valued. In its ruling, the Court concluded that this approach transgressed the boundaries of what may be assumed in a valuation.
Tarver v. Tarver- Appeal from the Circuit Court for Shelby County January 16, 2019
Tax-Affecting Is Not the Only Interesting Issue in This 2019 Tax Court Case
The issue of a premium for an S corporation at the enterprise level has been tried in a tax case, and the conclusion is none. This case marks a virtually complete valuation victory for the taxpayer. It also marks a threshold in the exhausting controversy over tax-affecting tax pass-through entities and applying artificial S corporation premiums when appraising S corporations (or other pass-through entities). This article provides an extensive review of the case.
After several years of litigation involving a number of hearings and trials on various issues, a trial to conclude the collective fair value of a group of related companies known as the AriZona Entities occurred. This article presents an in-depth discussion of the case and the valuation issues present.
In this article, we discuss the case of Richmond v. Commissioner in which the valuation of the Estate of Helen Richmond was questioned.
In April 1999, the Tax Court issued a decision authored by Judge David Laro in Alice Friedlander Kaufman v. Commissioner.
The Tax Court Memorandum demonstrated that the Court thoroughly studied and it appears well understood the QMDM. While the Court did not accept the expert’s 65.77% discount, the Court criticized the assumptions used, not the QMDM.
Based on our review of the case and Dr. Kursh’s report, it appears that Dr. Kursh used information that was factually based and within the range of reasonable comparisons with market data in his application of the QMDM. It is unfortunate, but the Court was apparently not convinced of the reasonableness of Dr. Kursh’s assumptions and their consistency with “hard data” that was in his report and otherwise readily available.
The Welch case reinforces a point we have made many times, that business appraisers need to be exceedingly careful in citing Tax Court decisions as support for positions taken in tax-related valuations.
A 1997 case illustrates the complexities that can evolve in the valuation of debt securities and the weight the Tax Court applies to an appraiser’s effort to obtain and verify information on a particular interest to be valued.
This case is a present interest victory for the taxpayer.
The Wandry case is a boon not only for business owners but also wealthy families with family limited partnerships or entities holding publicly traded stocks.
Mercer Capital’s review of Estate of Giustina v. Commissioner
This important decision contains lessons for business appraisers and users of business appraisal services.
The case of Astleford v. Commissioner is noteworthy for a number of reasons.
The Estate of Charlotte Dean Temple in United States District Court (No. 9:03 CV 165(TH) was adjudicated on March 10, 2006.
Estate of Noble v. Commissioner was filed on January 6, 2005. This articles notes two important issues that are raised by Noble.
The Family Limited Partnership (“FLP”) has been a common estate planning technique for the nation’s wealthy. For years it allowed families to avoid some tax liability when transferring assets to heirs by first placing those assets in a FLP.
The Tax Court’s decision in Albert J. and Christine M. Hackl v. Commissioner has provoked a lively discussion about how to achieve discounts to net asset value and still qualify for the annual exclusion.
On January 18, 2000, the U.S. District Court for the Western District of Texas issued an opinion in the first limited partnership case to be tried in federal court.