24 / September 2024

American Society of Appraisers (ASA) 2024 International Conference

Posted in: BVWire News Written by: Jim Alerding
Categories: business valuation accrediting organizations economic damages & lost profits estate and gift taxation

I had the pleasure of attending the 2024 ASA International Conference in Portland, Ore., September 15 to 19. This was my first time to visit Portland, Ore., and I found it to be a very pleasant and attractive place to be. The conference was held at the Downtown Hilton in Portland. The facilities there were adequate but not exceptional. There were some issues with the audio systems so that it was often difficult to hear the presenters in some of the rooms. No audio technicians were in the rooms to remedy the situation, which I understand was the product of the ASA not having them (read: paying them) to be there and not an issue with the hotel.

The content of the conference was overall very good. As in all conferences, there are some good to outstanding presentations and some not so good. I managed a decent sampling of each. Following are some random comments on some of the presentations from the Business Valuation track.

Dancing With the Tax Man: Valuation and Other Issues in IRS Audits of Transfer Tax Returns
Stephanie Loomis-Price of Perkins Coie LLP gave this outstanding presentation. Members of the conference committee must have realized they had a hit with this presentation since they gave it an hour and a half on Day 1 and it was the only presentation in its time slot.

The presentation began with a section on gift tax cases. Most presentations deal with estate cases and not gift tax cases. There was a lot of helpful information, some specific to gifts and some globally applicable:  

  • A new discount for having a difficult partner is gaining acceptance. Such a discount could apply in any valuation setting and not just in tax-related valuations. (Alerding takeaway: In my experience reviewing and digesting valuation cases, such a discount makes a lot of common sense. Many cases deal with business divorces and, by definition, they likely if not always deal with a “difficult partner.” Put this on your radar screen.)
  • Gift cases normally do not deal with underlying agreements (e.g., a partnership or LLC agreement). In some cases, however, the agreements become a necessity in determining whether or not a gift is eligible for the annual exclusion. For example, in the Wimmer case, the court decided that the ability of beneficiaries of the gifts to receive annual income was sufficient for the gifts to be qualified for the exclusion. The IRS had argued that the restrictions on use and possession of the gifts made them such that there was no present interest to “gift.” The court disagreed.
  • To “double your pleasure,” so to speak, use the same valuation to make annual exclusion gifts on December 31 of a year and then on January 1 of the next year.
  • The speaker noted that, for Tax Court purposes, the expert is required to provide all of your prior writings, speaking, webinars, etc. and that includes full copies of the presentations, articles, etc. if asked to do so, which the DOJ often asks for.

The AI Revolution
The last presentation of the conference was on the AI revolution, presented by Greg Endicott, ASA; Kevin Couillard, ASA; and Andrew Couillard, ASA. The conference committee, whether intentionally or not, seemed to put the best two presentations at the beginning and the end, the alpha and the omega. As noted in the materials, this presentation will discuss AI and “what will be the impact of this technology on the appraisal profession and how it can be utilized in the performance of valuation work.”

  • Greg started with some statistics from our own BVR survey on AI:

    • Forty-eight percent of BV firms are using AI, primarily for researching economic or industry conditions;
    • ChatGPT is the most popular AI tool, used by 70% of respondents; and
    • Fifty-two percent of firms are not using AI due to trust issues, data confidentiality concerns, and fear of AI “hallucinations."
  • Some of the models are now approaching or exceeding capabilities relative to humans (e.g., reading comprehension with unanswerable questions);
  • The implications in the legal landscape of attribution to AI models are significant:

    • Intellectual property rights; and
    • Copyright infringement.

  • The speakers also discussed the myriad of concerns over the use of AI, such as accuracy, reliability, privacy, confidentiality, transparency, auditability, consistency, bias, data recovery, security, and ethics.

The session on valuing the right of publicity (ROP) and name image and likeness (NIL) with Jay Fishman and Mark Roessler was an excellent presentation and an excellent view of a relatively new area of valuation and economic damages. Mark is a celebrity valuer and helped with Jay to get an excellent result in the Tax Court case involving the Michael Jackson estate. ROP recognizes an individual’s right to exploit his or her own name, image, and likeness for profit. NIL refers specifically to the use of these elements of an individual’s identity, primarily concerning athletes and celebrities.

  • One of the biggest takeaways was what has already begun with the use of AI and what might happen in the future, especially in the area of digital twinning.
  • They gave examples of both ROP and NIL. For example, Mark noted that both Arch Manning and Quinn Ewers are now at $10 million each in NIL value.
  • The speakers also analyzed the Jackson case as it relates to the NIL value for Michael Jackson post mortem. Mark derived a value of $3.1 million versus $161 from the IRS expert. Mark’s value included an analysis of actual deceased celebrities and their values. The court arrived at a value of $4.1 million.
  • Another takeaway: There is no penalty for the IRS overvaluing or undervaluing an asset, whereas there are penalties against the valuation expert for such misvalues. It allows the IRS to get a result that leads to a large difference in value and impose very high penalties but be unrestricted in the amounts that it claims as a fair market value.

There were other very excellent presentations providing information to business valuation professionals. Once again, there was a lot of good content in this conference. My colleague, Andy Dzamba, will also be providing his analysis of the conference in the BVWire and/or the Business Valuation Update.

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