Is the value of your business about to increase 12.5%?

Recent discussions by the new administration regarding changing corporate and individual tax rates got me thinking about how different income tax rates can affect the value of a company. For example, I ran some numbers with the following assumptions. The current effective tax rate on a pass-through company’s earnings at the individual level is 38 …

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Number of AZ Real Estate Appraisers Could Decrease

The number of Arizona real estate appraisers could decrease at a rate of 3% per year over the next decade. According to the Appraisal Institute, the pool of real estate appraisers in the United States is shrinking and aging. Sixty-two percent of appraisers are 51 and older while 24% are between 36 and 50. Only …

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When Should an Appraisal of a Non-Cash Charitable Contribution be Performed?

Taxpayers who make charitable contributions of non-cash property could be putting themselves in IRS penalty danger if the contribution is more than $5,000 and the property has not been appraised by a qualified appraiser who has issued a qualified appraisal report. A recent Tax Court case emphasizes the need for an appraisal report to be …

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In Federal Tax Court Your Report Is Your Testimony

The level of detail and the manner of explanation in a valuation report for tax compliance purposes is extremely important as the report serves as the expert’s direct testimony in Federal Tax Court. It’s interesting to observe the important steps that families take to protect their assets – hiring top wealth management teams, tax consultants, …

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Quantifying the Lack of Control Discount

Should business appraisers rely more on implied rates of return when quantifying minority discounts? A thought provoking webinar was sponsored by the American Society of Appraisers (ASA) on March 25, 2014. Presenters Eric W. Nath and Bruce A. Johnson encouraged appraisers to place much more emphasis on factors that would be considered by “real world” …

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The Battle Over Lack of Marketability Discount: Appraisers v. IRS

Nothing in business valuation is more debated than the discount for lack of marketability Why is the lack of marketability discount so controversial? The discount for marketability (“DLOM”) is defined as an interest in personal or real property for which there is not an active public market to convert the investment to cash within several …

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Calculations vs. Appraisal Opinion in Business Valuation for Marital Dissolutions

There has been much discussion in the valuation community regarding whether a calculation engagement (i.e., a calculation of value of a business) can be used in a marital dissolution in Arizona (and other jurisdictions) and whether a “calculation report” is appropriate in that context. Currently there is little guidance on this matter in Arizona. Should …

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No Appraisal, No Charitable Deduction

IRS Regs Require Tax Payer to Hire a Qualified Appraiser When Making a Charitable Contribution(1) The IRS appears to be examining charitable contributions more closely in recent years, paying careful attention as to whether the donor has properly dotted all i’s and crossed all t’s.  In the case of Mohamed v. Commissioner, T.C. Memo 2012-152, …

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