Estate Planning Appraisal Fundamentals

Nevin Sanli, ASAPresident & Founder, Sanli Pastore & Hill

Learn how assets are valued and how the IRS will consider the assets in order to best advise your clients.

The business is typically the cornerstone of an individual’s estate and its value. Knowing the aspects of a valuation and how to review a valuation report is critical for estate planning and filing returns with the IRS. This topic will discuss the various approaches and methods utilized in determining the value of a business, as well as the various drivers of a valuation assignment. The material will focus on how adjustments to the reported financial statements and a careful review of key documents are essential to understanding the value of a privately held company and minority interests therein. Valuation discounts are often a controversial issue in fractional interest valuations and the speakers will prepare you for how these should be assessed and discussed in a report. Examples and illustrations will show you how to apply the concepts discussed so that you can be best prepared when submitting returns and reports to the IRS.

Learning Objectives

  • You will be able to identify how to assess the application of the valuation methods used to determine the value of the business.
  • You will be able to discuss the appropriate scope of work needed when engaging an appraiser.
  • You will be able to recognize when discounts for lack of control and lack of marketability are applicable and assess the reasonableness of the discounts applied.
  • You will be able to explain how business appraisal techniques apply when clients own real estate entities.

Agenda

Explanation of the Primary Approaches and Methods Utilized in Determining the Value of Any Business

  • Understand Different Scopes of a Valuation Assignments (Tax Reporting vs. Planning)
  • Identify Main Valuation Drivers
  • How to Review a Valuation Report
  • Determining Appropriate Earnings Adjustments

How to Quantify Appropriate Valuation Discounts

  • Determining a Discount for Lack of Control
  • Determining a Discount for Lack of Marketability
  • Other Discounts to Consider

Unique Issues in Valuing Real Estate Holding Companies

  • Tiered-Entity Considerations
  • Unique Valuation Discounts
  • Key Governing Document Provisions

Preparing a Report That Withstands IRS Audit

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