Gift and Estate Tax Valuation
If you or your client’s business interest will be taxed due to gifting or estate planning activities, working with one of Corporate Valuation’s accredited business valuation professionals to appraise the interest will ensure both a smooth, transparent process, as well as a robust analytical report that holds up under scrutiny from the Internal Revenue Service (IRS). The Tax Court demonstrably favors appraisals produced by a qualified appraiser and held to the standards outlined below. If your business interest includes problematic or complicated assets, or if aspects of either the entity organization or capital structure would have a potential impact on value, our expertise is indispensable.
Our work with gifting or estate planning is a team process, typically including input from attorneys, CPAs, or other wealth consultants. By working with other professionals in the gift and estate planning fields, the appraiser does not render a legal opinion, but rather holds him/herself out as a professional who is qualified to defend an objective, independent opinion of value. In the event of extensive IRS involvement, Corporate Valuations can be retained to provide consultation on communications, education for our colleagues on relevant valuation issues, litigation support, and formal reviews of opposing expert reports.
The Internal Revenue Code (IRC) is the body of tax laws that the IRS enforces. Section 170(f)(11)(E) of the IRC provides definitions of a “qualified appraisal” and “qualified appraiser.”
A “qualified appraisal” means one that is:
“…treated for the purposes of [the IRC] as a qualified appraisal under regulations or other guidance prescribed by the Secretary, and…is conducted by a qualified appraiser in accordance with generally accepted appraisal standards and any regulations or other guidance prescribed…”
A “qualified appraiser” means an appraiser who:
“…has earned an appraisal designation from a recognized professional appraisal organization or has otherwise met minimum education and experience requirements set forth in regulations prescribed by the Secretary…regularly performs appraisals for which the individual receives compensation, and…meets such other requirements as may be prescribed by the Secretary in regulations or other guidance.”
Corporate Valuations produces qualified appraisal reports in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP), and our disclosures generally include:
- The stated appraisal purpose
- A description of the business interest
- A description of the valuation method(s), including comparable market transactions/merger-acquisitions, asset-based approaches, and income-based approaches
- Financial information such that straightforward replication of our conclusion is possible
- A description of any restrictions or other limiting conditions present
- Thorough support for all conclusions rendered
At Corporate Valuations, our accredited professionals have ample experience with gifting and estate matters. The American Society of Appraisers has a mandatory recertification program for all of its accredited appraisers, with which Corporate Valuations is fully compliant. Further, the President of Corporate Valuations currently serves as the Chapter 5 Governor of the American Society of Appraisers and maintains a thorough working knowledge of all regulatory information pertaining to gifting and estate planning matters.
