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Proposed IRC Sec. 2704 Regulations Released

Valuation and Planning Impacts This article outlines the major provisions of the proposed regulations. If the proposed regulations are adopted in their current form, they only apply to transfers made after the final regulations are promulgated, and the most pervasive provisions of the proposed regulations, apply only to transfers made at least thirty days after the restrictions become final. ...

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Conservation Easements Contributions

Heightened IRS Scrutiny A look into recent Tax Court cases brings to light several issues that are on the IRS’ “radar screen.” Past QuickRead articles have highlighted some of the cases, including Section 2036, or “bad facts” cases. Another hot-button issue for the IRS is the proper treatment of conservation easement charitable contributions. Since 2010, courts have published at least 60 opinions addressing ...

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ABA Mid-Year Tax Section Roundup

Estate, Gift, and Tax Projects in the Horizon At the ABA Mid-Years Tax Section Meeting, Cathy Hughes and Melissa Liquerman of the IRS Office of Chief Counsel revealed a number of projects that are underway at the Service. In this article, several of those projects pertinent to valuation analysts are discussed, including the status of sec. 2704 regulations. ...

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Tax Court Rules of What Constitutes a Gift in the Context of a Split-Dollar Life Insurance Policy

Estate of Morrissette v. Commissioner, 146 T.C. No. 11 (April 13, 2016) The Tax Court’s ruling in Morrissette is very important to the estate planning community, in that, intergenerational split-dollar life insurance arrangements have become much more popular since the IRS released its final split-dollar regulations in 2003. Yet, widespread use of this technique has been suppressed by uncertainty with respe ...

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Estate of Newberger v. Commissioner

What About Subsequent Events—Lessons from the Valuation of Artwork? In the December 2015 Tax Court Memo Estate of Newberger v. Commissioner, the Tax Court considered post-date-of-death sales prices in the valuation of three separate pieces of artwork owned by the decedent. Considered in one instance was the sale of the actual piece of art itself, and in two other instances, the sale of other pieces of art c ...

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Estate of Holliday, T.C. Memo 2016-51 (March 17, 2016)

A Taxpayer Loss—Assets Included in the Estate We find ourselves in a familiar place once again—that is, analyzing a case in which the IRS attacked an FLP under I.R.C. § 2036. Just two months ago, I wrote an overview of Estate of Purdue v. Commissioner, (T.C. Memo 2015-249), in which the IRS attacked a closely-held asset holding company, in that case it was an LLC, under I.R.C. §2036. While both holding comp ...

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Estate of Woelbing

Settlement of a Valuation Case Before the U.S. Tax Court This article discusses issues found in a case that is pending before the United States Tax Court (the “Tax Court”).  The specific issues relate to issues regarding sales of closely held stock to grantor trusts in exchange for promissory notes.  Specifically, the IRS took issue with two grantor sale trust transactions.  The two cases were filed on Dece ...

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U.S. Tax Court Update

Notable 4th Quarter 2015 Cases, Part II of II Part II of this article highlights the remaining notable 4th Quarter 2015 U.S. Tax Court Cases that will be of interest to valuation practitioners and business advisors.  Estate of Purdue reminded us that taxpayers need to address 2036(a) concerns and establish a non-tax reason.  In addition, the case reminds us that gifting an equity or LLC interest may not qua ...

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U.S. Tax Court Update

Notable 4th Quarter 2015 Cases, Part I of II Part I of this article highlights notable 4th Quarter 2015 U.S. Tax Court Cases that will be of interest to valuation practitioners and business advisors. Estate of Purdue reminds us that taxpayers need to address 2036(a) concerns and establish a non-tax reason. In addition, the case reminds us that gifting an equity or LLC interest may not qualify as a present i ...

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Estate of Purdue v. Commissioner

T.C. Memo. 2015-249: A Checklist to Address 2036 Concerns The issue raised in Estate of Purdue v. Commissioner was whether the “decedent’s desire to have the marketable securities and the building interest held and managed as a family asset constituted a legitimate non-tax motive for the transfer of property to PFLLC.” ...

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Fleming Cardiovascular, P.A. v. Commissioner

Qualified Business Appraiser and Appraisal Needed A November 2015 memorandum by the U.S. Tax Court in Fleming Cardiovascular, P.A. v. Commissioner found that the Internal Revenue Services ("IRS") did not abuse its discretion in revoking the Fleming Cardiovascular, P.A. Employee Stock Ownership Plan's ("ESOP") qualified and tax exempt status for failure to operate in accordance with plan documents. Of note, ...

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Legal Research

Where to go to get Case Law Research can be daunting in and of itself. However, researching case law can be overwhelming, especially if you do not have the fanciest databases or are not aware of what is offered on a more economic level. Thankfully, there are tools and resources available to help you find what you are looking for. ...

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Marijuana Dispensaries

Review of BVR’s Special Report on Marijuana Dispensaries What do business valuation advisors and consultants need to know before providing consulting services to marijuana establishments? There are opportunities and challenges; keep in mind that marijuana is listed as a Schedule I Controlled Substance. At the national level, one Presidential candidate introduced the Ending Federal Marijuana Prohibition Act ...

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To Cite or Not to Cite?

Thoughts From the Field on Whether to Cite Legal Precedent in a Report Should a valuation analyst include legal citations in a report? Calculation engagement? In this article, Peter Agrapides, MBA, CVA, shares his thoughts on that question. ...

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Estate of Giustina v. Commissioner

Tax Controversy Insights In matters argued before the U.S. Tax Court, valuation professionals are frequently asked to provide opinions related to the value of closely held businesses and of fractional ownership interests in closely held businesses. This discussion relates to a recent appeal of a U.S. Tax Court decision involving such valuation issues. The case in question is Natale B. Giustina v. Commission ...

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Estate of Richmond v. Commissioner

Guidance on How to Calculate the Built-in Capital Gains Tax?! Estate of Richmond is well known among experienced valuation professionals for at least two reasons. First, the U.S. Tax Court was critical of the experts’ lack of credentials and the fact that the estate submitted an unsigned, marked-up report with the 706. Second, the U.S. Tax Court did not allow a 100 percent BICG tax reduction. Rather, the Co ...

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Kardash v. Commissioner, T.C. Memo. 2015-51

Assessing Solvency, Fraudulent Transfers, and Liability When Distributions are Made to Minority Shareholders The recent U.S. Tax Court case of Kardash v Commissioner, T.C. Memo, 2015–51 provides guidance regarding transferee liability and underscores how valuations are used to determine when and if a subject company is insolvent. The case also summarizes a number of defenses used (and rejected) to counter a ...

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Business Valuation in Divorce Case Law Compendium

At some point in a business valuation analyst’s career, an attorney or pro se party will call asking for a business valuation and perhaps even to retain your services. A good starting point is Business Valuation in Divorce: Case Law Compendium, 2nd ed. This edition is 584 pages long and provides a comprehensive court case digest that emphasizes similarities and differences in the treatment of goodwill (prof ...

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