The 2024 elections delivered a Republican sweep of the Presidency and Congress, setting the stage for potential tax policy changes. The likely extension of tax provisions from the 2017 Tax Cuts and Jobs Act, which are currently set to expire on January 1, 2026 is central to the uncertainty. The potential ten-year maximum extension would include maintaining the elevated estate and gift tax lifetime exclusion amount of $10 million, indexed for inflation ($13.99 million in 2025). However, legislative realities may lead to a shorter extension than ten years or even modifications to the exemption altogether. In this article written shortly after the 2024 presidential election, we outline possible changes to tax policy and the need for continued estate planning.
By this Thanksgiving, Congress hopes to pass two of the largest bills in American history, the $1.2 trillion infrastructure bill (which was signed into law by President Biden on November 15th) along with a $1.75 trillion Build Back Better bill. While the infrastructure bill made it through Congress with minimal tax hikes, the passing of the larger reconciliation bill may still create sweeping changes to American tax policy, specific to high-net-worth individuals. This article summarizes what is in the Build Back Better bill and what it might mean for taxpayers.
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.
The article, presented as a pdf download, suggests a technique based on the adjusted capital asset pricing model whereby business appraisers and market participants can independently develop EBITDA multiples under the income approach to valuation. discusses what the adoption of these proposed regulations might mean from a valuation standpoint.
On August 2, 2016 the IRS released its long expected proposed regulations in regards to Section 2704. The substance of this proposal, according to the IRS, is to regulate treatment of entities for estate and gift tax purposes. This brief article discusses what the adoption of these proposed regulations might mean from a valuation standpoint.
A number of tax traps become apparent during the due diligence process for those professionals who knows how to look for these issues. This article seeks to identify a few that commonly show up during the process of acquiring the equity of a company.
Golden parachute payments have long been a controversial topic. These payments, typically occurring when a public company undergoes a change-in-control, can result in huge windfalls for senior executives and in some cases draw the ire of political activists and shareholder advisory groups. Golden parachute payments can also lead to significant tax consequences for both the company and the individual. Strategies to mitigate these tax risks include careful design of compensation agreements and consideration of noncompete agreements to reduce the likelihood of additional excise taxes.
In this article, we discuss the case of Richmond v. Commissioner in which the valuation of the Estate of Helen Richmond was questioned.
It appears that Mr. Koons’ careful estate planning, involving a significant sale and redemption transaction of business operations to provide liquidity and flexibility in his later years, was disrupted by an untimely death. While estate planning professionals can hardly advise against a premature passing, the disruption here highlights the importance of starting early with business valuation input to help avoid a complex confluence of strategic transactions within a narrow time frame.
Business owners seldom think about a valuation strategy for dealing with the IRS on gift and estate tax matters. Many owners ignore the importance of estate tax planning, which can also be called lifetime planning. Lack of vision or short-sightedness on planning can be damaging to family wealth and succession.
In this second part of a two-part series, we have collected eight examples of mistakes that valuation experts have made, as reported in federal courts tax decisions. It is important to note that there are two sides to every story, and courts do not always get it right. For this reason, we do not name any valuators in this collection of mistakes to avoid.
In this article we have collected 16 examples of mistakes made by valuation experts, as reported in federal courts in tax decisions. It is important to note that there are two sides to every story, and courts do not always get it right. For this reason, we do not name any valuators in this collection of mistakes to avoid.
A “top 10” list of things every estate planner should know about business valuation & list of helpful resources.
Family limited partnerships have become an increasingly popular estate planning tool.
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.
The quoted unit price of a publicly traded security is sometimes not definitive of fair market value for a specific block of the shares or bonds. Such a condition typically arises when the subject holding has impaired marketability.
The world of fair market value is not the real world. It is a special world in which the participants are expected (defined) to act in specific and predictable ways.
A review of the 1993 paper “Market Discounts and Shareholder Gains for Placing Private Equity” by Michael Hertzel and Richard L. Smith.
A new form of business organization, the limited liability company (LLC), could present new planning opportunities for business owners.
Valuing a limited partnership interest can be complicated and time consuming. Whatever the level of complexity, careful documentation of the valuation process will benefit users of limited partnerships.
Since we are dealing with limited partnership interests, and since what can be transferred in most instances is only an assignee interest, shouldn’t there be a further discount applicable to the assignee interest?
As part of the appraisal due diligence process, information is obtained from general partners and/or managing members as well as from a variety of other sources. Such information provides a basis for the appraiser to understand the composition, operations, strategy, and governance of the entity. This article focuses on the importance of analyzing, from a valuation perspective, the reasonableness of this information.
The alternate valuation date warrants serious consideration at any time, but particularly in the current economic environment.
Under certain conditions, a GRAT can result in the transfer of wealth to family members without gift tax.
