Estate and Gift Tax Valuations

Federal law requires the valuation of securities for gifts, estate tax, and charitable contributions. In our experience, the taxing authorities who review company valuations don't always have an appreciation for how investors behave in real markets. Fortunately, the Tax Court (and Courts of Appeal) generally defer to market-based evidence. Because of our background in public investing, we intuitively understand how investors evaluate investment alternatives. We think this gives us a different perspective, one which will prevail if challenged.

 

We regularly publish articles in national publications addressing recent Tax Court cases and current valuation issues in the estate and gift tax environment. Some of our previously published articles are listed below. Call our number below to discuss any estate and gift tax valuation question you have.  

Testimonials

Over the last 20 years, my law firm and I have hired Greg to produce valuation reports for various businesses, usually for gift and estate tax purposes and often involving fractional interests in those businesses. Several of the reports that Greg produced for our clients have gone through estate tax audits with the IRS, but none of the reports has been successfully challenged.   
 
The reports Greg produces are professional, detailed, clear, and on-time.  He is always accessible and responsive.  We continue to highly recommend Greg’s firm to our clients.

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Kate Ohlandt, Partner, Farella Braun + Martel

 
 
 Articles & Newsletters

Kress and Jones Courts Decide Valuation Issues in Taxpayer’s Favor Based Upon the Better Argument, Valuation Issues in Gift and Estate Tax, March 2020

 

"Two recent valuation cases, Kress v. US and the Estate of Jones, were decided based upon the best argument and evidence presented at trial. In refusing to weight unsupported positions or superficial analysis presented by the IRS experts, the Courts showed a refreshing ability to understand and decide between competing views of valuation issues."

Estate of Adell - The Tax Court Wades into Murky Waters, Valuation Issues in Gift and Estate Tax, September 2014

 

"The case makes for some very interesting reading as Judge Paris explores the inner workings of a religious broadcasting channel called 'The Word.' Even more interesting from a valuation perspective, is the organization of the related entities that provide support to 'The Word,' where the cash flows before and after the death of Mr. Adell, and where the real power lies to control those cash flows."

 

Parsing the Estate of Richmond, Valuation Issues in Gift and Estate Tax, March 2014

 

"...Judge Gustafson did a good job of detailing the reasoning behind his

conclusions. Unfortunately, the valuation experts failed to bring to light

factors that could have advanced the Tax Court’s understanding of the

broader tax disadvantages of investment holding companies that are C-

corporations."

 

Estate of Jensen - Revisiting Built-In Capital Gain Discounts, Valuation Issues in Gift and Estate Tax, Spring 2011

 

"We thought we’d take this opportunity to review the Tax Court’s opinion in the Estate of Jensen, and broaden the discussion to include our thoughts on the appropriate treatment of built-in capital gains in other legal entities, such as partnerships, limited liability companies, and S-corporations. We’ll also discuss how the size of the interest being valued can also impact the treatment of built-in capital gains."

 

Investor Behavior and the Valuation of Pass-Through Entities, California Trusts and Estates Quarterly, Spring 2011

 

"...pass-through entities pay almost no entity level tax, so it does not
appear that they should be burdened with a fictitious tax. Based
upon our quantitative analysis of the actual economic benefits of
pass-through status though, we believe the premium is at most 25%
to 30%."

 

Excess Corporate Cash, Trusts & Estates, March 2010

 

"Excess cash be worth significantly less than its face value to minority investors - as much as 65 percent to 70 percent less."

 

Valuation of Pass-Through Entities, Valuation Strategies, March/April 2001

 

"For more than a decade, there has been considerable discussion and debate in the valuation community regarding the valuation of pass-through entities, such as limited liability companies, S corporations, and partnerships. The debate was reinvigorated by 'Gross', a Tax Court case, in which Judge Halpern concluded that the subject S corporation should not be treated as taxed at the entity level during the valuation process, contrary to the opinion of many valuation experts."

 

Valuing Common Stock in Development-Stage Companies, Valuation Strategies, September/October 2000

 

"Valuing the common shares of private, development-stage companies has tested the resources and skills of valuation professionals for years. Traditional valuation methods are often difficult to apply."

 

 

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