“Permit me to be critical,” Judge David Laro (U.S. Tax Court) told the AICPA BV attendees last week, in the session that closed the New Orleans conference. “I’m not trying to be harsh,” he said, prefacing his views on the “top ten mistakes” appraisers make in court (and how to prevent them). “I just want to point out what you can do better.” In taking direct questions from moderator Ron Seigneur and audience members, Laro’s “top ten” included:
- Be consistent. “You don’t get different results whether you work for the taxpayer or the government.”
- Be independent. “Candidly, if a conflict of interest comes to the attention of the court, it completely eradicates your credibility.”
- Be thorough. BV reports are getting more complex, “and that’s good,” Laro says. He wants to see less boilerplate and more “strength of analysis of the data.”
- Be thick-skinned. Recent critiques of appraisers by federal tax and circuit courts may have gone too far—for example, it shouldn’t really matter what state the appraiser comes from (vis-à-vis the subject interest) or how long he/she remains on a site visit. “What matters is what you do there.”
- Be independent. Laro couldn’t stress this one enough. “Don’t get influenced by the people who hire you. That catches up with you real quick and that never succeeds.”
- Be peer-reviewed. Don’t depend on the courts to do this for you. “Frankly, the court is not your peer. This organization is,” he said, “your colleagues are. The court should not be put in the position of sanctioning or approving one method or another. That’s for you to do.”
For all of the items on Laro’s long list—including his opinion on marketability discounts, the possibility of a Jelke appeal to the U.S. Supreme Court, BV standards and appraiser certifications—look for a full write-up in the next (January 2008) issue of the BVU.
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