Gift Tax Case Pivots on Key Assumption Informing Valuations

Business Valuation UpdateVol. 20 No. 12
Legal and Court Case Update
December 2014

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3599 Industrial and Commercial Machinery and Equipment, NEC
332710 Machine Shops
estate and gift taxation
income approach, normalization, discounted cash flow (DCF), gift tax, market approach, merger, s corporation, estate planning, sic code, comparable, reasonable cause, valuation
Cavallaro v. Commissioner
2014 Tax Ct. Memo LEXIS 189
September 17, 2014
US
Federal Court
Federal
United States Tax Court
Timothy Maio, Ernst & Young; John Murphy, Atlantic Management Co. (petitioners); Marc Bello, Edelstein & Co. (IRS/respondent)
Gustafson

Summary

Taxpayer parents incurred gift tax liability when, based on improper valuations, they agreed to merge their S corp. with their sons’ S corp. and accepted an unduly low interest in the new company while sons received an unduly high interest, Tax Court says ...

See Also

Cavallaro v. Commissioner

Full Text of Court Cases
September 17, 2014

Taxpayer parents incurred gift tax liability when, based on improper valuations, they agreed to merge their S corp. with their sons’ S corp. and accepted an unduly low interest in the new company while sons received an unduly high interest, Tax Court says ...