Scrutiny on the part of the Tax Court in reviewing discounts for lack of marketability and control has placed renewed emphasis on the accuracy and defensibility of these adjustments to limited partnership interest appraisals. Therefore it was not surprising that, during the recent Partnership Profiles’ “Appraising Family Limited Partnerships” course in Dallas, many participants asked presenters Bruce Johnson and Jim Park (Munroe, Park & Johnson) about the appropriate discount when valuing an FLP.
“The primary objection of the Tax Court has been how you support the discount and the rationale behind it. It is not a question of whether the discount is appropriate, it’s just how it’s determined,” Johnson says. “The ASA recognizes that as time goes along, concepts and theories change. As we get more and more information we continue to challenge or agree with new concepts and apply them in a better way,” he added.
Indeed, Johnson and Eric Nath (Eric Nath & Associates LLC) discuss their perspectives on valuation of private minority interests in the upcoming ASA webinar Private Minority Interests Are NOT Bought or Sold Based on Discounts! on Tuesday, March 25, 2014, from 2:00 p.m. to 4:00 p.m. ET.