Pulse of the BV profession: tax-affecting is OUT, specialization is IN

BVWireIssue #111-2
December 14, 2011

When we first polled BV appraisers five years ago, their dominant concern was “the continuing debate on tax-affecting,” which nearly half (42.1%) of those surveyed believed was the most “impactful” issue in 2006. The following year, the number had slid to roughly 28%; and this year, none of the respondents (0%) ticked off tax-affecting from the list of practice- and profession-shaping issues.

The IRS has followed a similar slide: in 2006, over 31% of respondents picked “all things IRS” as having the greatest professional impact that year. (Remember, that’s when the Pension Protection Act came out, with its provision for appraiser penalties.) By 2007, only 16% of respondents believed that IRS issues had the greatest influence on their BV practices. This year, only 10% still do.

Fair value for financial reporting may have also peaked: in 2006, only 10.5% of those polled believed it was the most impactful issue, but that number more than doubled to 25.6% in 2007. This year, a mere 3.3% of respondents believe that FASB pronouncements are shaping the BV profession.

What issue has had the greatest impact in 2011? Why, the global economy of course, which nearly a third of respondents (30%) picked over any BV-specific issue. The same percentage (30%) picked the increasing specialization of the BV profession. Slightly fewer (20%) say that the day-to-day practice of determining discounts, cap rates, and other analytical inputs had the greatest influence this year; in fact, this percentage has slowly trended upward since 2006 and 2007, when 5.3% and then 11.6% of respondents, respectively, picked discounts as their primary concern.

Will the macro-economic crisis continue to dominate your practice in 2012? Or will it focus the BV profession on micro-specialties? We’ll cover the prospective aspect of our poll in our next issue (the last of 2011). There’s still time to participate: we’ve kept our online survey open. Its two questions will only take two minutes—and will help take the pulse of the profession now and in the years to come.

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