IRS DLOM Job Aid ‘brings nothing new,’ say BV appraisers

BVWireIssue #109-1
October 5, 2011

As expected, nearly two-thirds (65.1%) of respondents to last week’s online survey say that they have read the IRS DLOM Job Aid, and more than a quarter (27.1%) will in the near future. Only 7% of respondents won’t read the Job Aid or say it’s not relevant to their practice.

What may be more surprising: just over half (53.3%) of respondents who’ve read the Job Aid believe that it adds “nothing new to the discussion” of determining marketability discounts. Of the remaining half, nearly three-quarters (72.7%) believe that the Aid’s most important contribution is its broad overview of DLOM methods, while more than a third (36.4%) focus on its implicit assumption that analysts will have to defend every percentage point of a DLOM above zero.

The Job Aid “shows what [IRS] opinion is and what we have to fight against,” commented one respondent. However, the vast majority (83%) say they don’t expect the Job Aid to impact their current practices other than perhaps changing the emphasis and explanation in reports. Several appraisers are waiting to see how the profession as a whole responds. Other survey insights:

  • “It brings nothing new to the table and will change nothing.”
  • “It will cause more disputes.”
  • “The IRS has not been able to convincingly prove . . . that the restricted stock study method is deficient in any way.”
  • “I will only use it when faced with an IRS challenge on discounts, as an insight into their thinking and ‘logic.’ Other than that, I don’t believe much of anything the IRS produces is valuable. Does anybody?”

To find out just how the profession is vetting this document and absorbing it into current tax practices, tune in to BVR’s special 100-minute webinar, FMV Responds to the IRS DLOM Job Aid, featuring Lance Hall (FMV Opinions) on October 12, 2011.

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