If you’d like a copy of the September 2009 Discount for Lack of Marketability Job Aid for IRS Valuation Professionals, created under the leadership of Mike Gregory and a number of other top IRS valuation experts, it’s now available at the free downloads page at BVR. It’s a must-read for any business appraiser who does valuations for tax purposes, and it refers to much of the material presented at the BVR Tax and Valuation Summits, chaired at both the University of San Diego and Georgetown University Schools of Law by Judge David Laro, Mel Abraham, and others.
BVWire thanks Richard Warner (Great Lakes Valuation), current editor of the ASA’s BV E-Letter, for alerting us to the Review of the Discount for Lack of Marketability: Job Aid for IRS Valuation Professionals developed by the IRS Engineering/Valuation Program DLOM Team. Although completed in 2009, the 107-page Job Aid wasn’t available on the internet until just recently, and contains a comprehensive review of the models, databases, studies, and case law pertaining to discounts for lack of marketability. Notably, in its final overview, the Aid advises IRS reviewers to “approach [the] marketability discount as a valuator,” adding:
If you are approaching the question of DLOM fresh, either as a reviewer confronted with an unreasonable taxpayer position based on invalid approaches or as a valuator charged with making your own valuation discount decisions, it is often helpful to start with a basic question as relates to DLOM. That question is: “Under the prevailing facts and circumstances and considering the nature of the interest to be valued why is the DLOM not zero?” By enumerating the factors that would lead to a conclusion that some DLOM at all is appropriate you will be building a framework as to how substantial a discount for lack of marketability might be reasonable. This process will give you a reality check on DLOM amounts that you might ultimately derive using some of the approaches discussed in this job aid.IRS sources acknowledge the public availability of the DLOM Job Aid without officially endorsing its content. With that in mind, again, we’ve made the Job Aid available as a free download: click here.