How Business Valuations Drive Smarter Lending Decisions This article provides a case study that highlights the methodology behind SBA-compliant business valuations. The article underscores the importance of grounding the analysis in standard valuation techniques, using reliable industry benchmarks, and properly documenting adjustments. The role and value of business appraisers to the lender and parties involved in a potential SBA-financed transaction is also discussed. Business valuations play a vital role in SBA financing. For both 7(a) and 504 loan programs, an independent business valuation is typically required in the following situations: The total financing amount (including SBA loans, seller financing, or…
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The Tax Court Says Certified A recent Tax Court opinion brought to light the importance of having an appraiser designation from a professional appraiser organization. While the decision is limited to Tax Court cases, it provides a cautionary tale for all who provide business appraisals in litigious situations. A recent Tax Court opinion brought to light the importance of having an appraiser designation from a professional appraiser organization.[1] While the decision is limited to Tax Court cases, it provides a cautionary tale for all who provide business appraisals in litigious situations. The case involved a charitable contribution of shares in…
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Tax Saving Tips for Small Business Owners This article discusses the recently issued Rev. Proc. 2022-32. The revenue procedure also serves to remind every estate planner that the days of the high lifetime exemption will soon be ending starting in 2025, if not sooner with all the uncertainties in Congress and the economy. The author discusses the merits of gift-giving in light of the potential changes. On July 8, 2022, the IRS released a revenue procedure that can be seen as a wake-up call about a tax-saving opportunity that may be overlooked by estates and their fiduciaries. Rev. Proc. 2022-32…
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Non-Litigation #2 and Litigation #4 The NACVA’s Standards Board was formed to continually review the organizations’ standards and to ensure that the NACVA’s Professional Standards remain up to date, relevant, and relatively consistent with the standards of the other professional organizations. This article addresses the second Non-Litigation and the fourth Litigation FAQ Interpretations published by the NACVA. [su_pullquote align=”right”]Resources: NACVA Professional Standards Standards FAQ Library [/su_pullquote] Business valuation/appraisal standards are promulgated by different business appraisal organizations. The NACVA’s Standards Board was formed to continually review the organizations’ standards and to ensure that the NACVA’s Professional Standards remain up to date,…
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December 2018—U.S. Tax Court on Qualified Appraisals and Gill v. Gill, Minnesota’s Supreme Court Rules on the Status of Earn-Outs in Dissolution Cases The U.S. Tax Court issued two valuation memorandums in September and October 2018. Each memorandum serves as a reminder of the importance of attaching a qualified appraisal. The issue in Presley v. Commissioner, T.C. Memo. 2018-171 (October 15, 2018) was whether petitioners were entitled to charitable deductions claimed in 2010 relating to land improvements paid before 2010 that benefitted a religious charity. We cite pertinent portions of this decision since it involves tax planning and the importance of…
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That You as a Business Valuer Need to Know About On August 8, 2018, the Service released proposed 199A regulations. Those regulations are important and mark a dramatic change from the prior tax regime. Another change that also marks a departure involves the release of final regulations for non-cash charitable deductions. In this article, the author discusses the latter.
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The Tax Rules Were Never Friendlier, But Changes May be on the Way The biggest loophole in the tax code may soon be coming to an end—at least according to the messages sent by the Obama administration and its recent budget proposals. The American Taxpayer Relief Act of 2012 (ATRA) set a whole new tone for most estate plans when it took the dreaded estate tax off the table. However, it is no secret that the IRS has been making a concerted effort to recapture some of the revenues lost from property transfers by way of gift or upon death.…
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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 Court provided guidance regarding the extent of the BICG deduction. The author, an experienced valuation advisor, shares his views on both of these issues.
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Practice Pointers from the Field How can a credentialed valuation analyst compete with a low-cost provider of valuation services performed by a professional lacking a business valuation credential? In this article, the author shares how he has succeeded conveying the value of using a credentialed and qualified business appraiser.
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Thoughts from Experienced Litigation and Business Valuation Professionals Entering the Industry In this article, seasoned BV and litigation support professionals John DelGrego and Heidi Walker share why litigation can be invaluable to a BV professional. The co-authors also expound on the professional perils and high expectations placed by the Tax Court on expert witnesses. Expert witnesses must be objective, current on the law, and persuasive.
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Fifth Circuit Disallows 40% Valuation Misjudgment Penalty, OKs 20% Negligence Penalty The Court of Appeals for the Fifth Circuit disallows a 40% valuation misjudgment penalty in Bemont Invs., LLC v. United States, but affirms a Texas Court’s 20% negligence penalty. Judge Goeke at the Tax Court draws distinctions on when charitable deductions are allowable in Dunlap v. Commissioner.