Course Overview and Purpose
The purpose of this webinar is to ensure attorneys understand how ongoing or anticipated transaction activity can significantly impact fair market value determinations for gift and estate tax purposes. Using the framework of IRS Chief Counsel Advice 202152018 and real-world transaction dynamics, the webinar addresses how potential or ongoing sales activity affects appraisals for gift and estate tax reporting. Participants will gain insight into the stages of the M&A process, relevant valuation methodologies, and the factors that increase or reduce deal success probability. The webinar also explores how to weigh sale and no-sale scenarios when determining fair market value and how to assess the impact of contingent considerations. This program equips advanced estate planners with the knowledge to help clients avoid unintended tax consequences when engaging in simultaneous exit and wealth transfer planning.
Target Audience: Advanced Trust & Estate Planning Attorneys
Learning Objectives:
Explain key IRS guidance from CCA 202152018 regarding business valuations during a transaction process.
Identify and describe the six stages of the M&A process and their implications for valuation.
Evaluate when and how to incorporate potential transaction proceeds into transfer tax valuations.
Apply the “Levels of Value” framework to distinguish between control, minority, and nonmarketable interests.
Assess the impact of contingent consideration (e.g., earn-outs) on the fair market value of business interests.
Recognize common pitfalls in valuation reporting that may trigger IRS scrutiny in estate planning contexts.
Content Outline:
I. Introduction – When Estate Planning and Transactions Overlap
A. Boomers are exiting: The Silver Tsunami of business transitions and estate planning
B. Why appraised value for estate planning purposes does not always equal potential transaction proceed
II. IRS Guidance on Transaction-Affected Valuations
A. Summary and implications of CCA 202152018
B. Importance of incorporating “reasonably knowable facts” at valuation date
C. Impact on GRATs, CRTs, and other transfer vehicles
III. Considering the Transaction Process in an Estate Planning Valuation
A. M&A Process Stages and Valuation Considerations
1. Planning, marketing, qualification, selection, diligence, and negotiation
2. When transaction proceeds become valuation-relevant
B. Deal Success Factors and IRS Considerations
1. Market data on deal failures
2. Internal company factors: deal structure, financials, bidders, timing
C. Valuation Methodologies and Levels of Value
1. Nonmarketable minority, marketable minority, and control values
2. Application to estate and gift transfers
IV. Adjusting Deal Proceeds
A. How to account for earn-outs and other performance-based payments
B. Time value and probability-weighted adjustments
V. Case Examples and Practice Tips
A. Application to hypothetical scenarios
B. Best practices for consistent and supportable valuations
C. Planning early and communicating with valuation experts
VI. Conclusion & Q&A
Instructional Method: Live Webcast
Program Level: Intermediate
Duration and Credit Hours: The total instructional time for this webinar is 60 minutes.