Judge Laro offers takeaways on litigating tax valuation cases

A highlight at the 2015 AICPA forensic and valuation services conference in Las Vegas was “Valuation in Tax,” a panel in which several leading minds on taxation discussed hot topics in the valuation area. The star of the illustrious gathering was Judge David Laro. He offered thoughts on a range of issues, including tax affecting, USPAP, standard of value, discount for lack of marketability, concurrent witness testimony (aka “hot tubbing”), and more.

For example, in terms of the standard of value, Judge Laro reminded experts that one thing they can do to ensure their testimony is admissible is using the correct standard of value. It’s the fair market value, not the market value. In other words, the focus is on a hypothetical willing buyer and a hypothetical willing seller that engage in an arm’s-length transaction; the focus is not on actual sales data, he cautions. If an expert applies the wrong standard of value, he or she can be sure the Tax Court will disregard the valuation. Today’s Tax Court judges are very sophisticated when it comes to valuation, Judge Laro added.

To read more about his hot topics discussion, click here.