Gallagher Estate v. Comr., (T.C. Memo. 2011-148) engendered at least two spirited analyses online last week. On the blog The Business Valuation Reviewers Handbook attorney Paul Hood remarks:
This is a very interesting valuation case because if you didn’t read the opinion except for the numbers, you’d have concluded that the estate’s appraiser prevailed! But you’d be dead wrong. The estate’s appraiser got hammered for failing to sufficiently explain himself in the report and for being internally inconsistent.Peter J Reilly (CCR LLP) opines in the Forbes blog Passive Activities:
I find it intriguing that of the five valuations the one that the Court came closest to was the value on the return as filed. They hadn’t even hired an appraiser for that one, but were using the valuation the company used for other purposes. Even though the Court came out closer to the RCM appraisal, they more often than not seemed to like the conceptual approaches in the KTS appraisal, although sometimes the Court indicated that when the two appraisers agreed on something the Court would go along, but didn’t necessarily approve. The clearest thing that came out is that its holding in Gross v Comm to not tax affect S Corporation earnings does not require a lot of fancy math. It appears that the RCM appraisal would have done better with more words and less math. After all Tax Court judges are lawyers.