Hello
Valuation and Litigation Insights is back!
Our renewed mission is to bring you hand-picked content related to business valuation and litigation intended to help you and your clients get better results.
We are over a month into 2024, and I hope things are off to a good start for you. It is looking to be an eventful year.
The 2017 The Tax Cuts and Jobs Act (TCJA), which established very generous exemptions for estate taxes, is sunsetting after 2025. We explore what that means for succession planning and the demand for business valuations.
More often than not, parties in a dispute are seeking to avoid the enormous time and costs associated with litigation. One alternative is mediation. We share an article that discusses how the business valuator can help in the mediation process.
Section 170 of the Internal Revenue Code provides guidelines as to what is a "qualified appraiser," but it has rarely been tested. We explore a recent tax court decision that threw out the valuation opinion of a non-certified investment banker.
So how do you choose a valuation specialist? We share an article that provides a good framework for selecting a valuation professional that is the right fit for you and your client.
Time to jump in. Hope you enjoy this newsletter and find it useful!
Valuation and Litigation Insights
News and Trends
Why Business Valuation is Heating Up for Estate and Gift Tax Planning Purposes
The Tax Cuts and Jobs Act (TCJA), enacted in 2017, doubled the federal estate tax exemption.
As of 2023, the federal estate tax exemption stood at $12.92 million per individual, or $25.84 million per married couple.
But all that is changing in 2026, when the TJIA exemptions sunset.
Without further legislative action, the thresholds are set to decrease to $12.0–16.0 million for married couples and $6.0–8.0 million for individuals (adjusted for inflation) in 2026.
That’s a big drop.
Gift and estate tax attorneys are, or should be, working quickly to help their high-net worth clients take advantage of the higher tax thresholds before they lapse in 2026.
This in turn will result in a surge in demand for business valuation services.
This informative article explains how valuation professionals work with gift and estate tax attorneys to safeguard and optimize wealth transfer strategies.
quickreadbuzz.com
Things to Know
Mediation and Conflict Resolution with Business Valuations
When the parties are open to it, mediation is a way to resolve conflicts that can save time, money, resources, and sanity.
How does this process work when the valuation of a business is at issue?
This article explains the mediation process and how it works in the context of business valuation.
mikegreg.com
Noncertified Occasional Valuer is Not a Qualified Appraiser, Per Tax Court
What is a "qualified appraiser" for tax purposes?
According to Section 170 of the Internal Revenue Code, a qualified appraiser is one who either has relevant credentials or sufficient experience, and who performs appraisals regularly. But how much experience is enough? And what does "regularly" mean?
A recent tax court case provides some guidance. In Hoensheid v. Comm’r (In re Estate of Hoensheid), which involved a charitable contribution of shares in a closely-held corporation, an investment banker performed the valuation. He had no appraisal certification, and performed business valuations for prospective clients “once or twice a year” to solicit their business.
The Tax Court ruled the investment banker was not a qualified appraiser. Thus, the donors were not entitled to a charitable tax deduction.
The moral is, if you need an appraisal, hire an appraiser -- especially if the work is going to scrutinized by the Tax Court.
bvresources.com
Tools and Tips
How to Select a Business Valuation Expert: A Guide for Attorneys
Choosing a business valuation expert can be a daunting task for an attorney.
Each client and situation is different, and there are many experts to choose from.
So what do you look for in an valuator?
Hint: soft skills - such as being able to communicate - are as important as what is on the resume.
And industry experience, while nice, is not that relevant. You are hiring a valuation specialist, not an industry expert. Most valuators can learn important information about a company and its niche while doing the appraisal work.
I would add an attorney is well served to find a valuator who will refer out work outside their own specialty. A professional who claims to excel in every area is probably not particularly good at anything, either.
This article provides a good overall guide for attorneys when trying to find a valuation expert for their clients.
gma-cpa.com
In Closing
That's it for now. If you found this issue of Valuation and Litigation Insights useful, please forward it to a friend or colleague.
And if you have a valuation or damages-related issue you would like to discuss, let me know! I and my colleagues at Grobstein Teeple, LLP would be happy to help.
You can reach me one of the ways below.
Talk to you soon!
Will
William W. Thomsen
Director of Valuation and Litigation Services
Grobstein Teeple, LLP
www.gtllp.com
Call me at 818-502-4950
Valuation and Litigation Insights