Estate of Adler v. Commissioner of Internal Revenue
Whether gifts of property should be valued as a whole or as separate fractional interests, with appropriate discounts, depends on when the interests are separated, during the decedent’s lifetime or at death.
United States v. Richey
Ninth Circuit confirms that IRS may subpoena appraiser’s work files when the taxpayers’ liability has not yet been “finally determined;” and also, no privilege or protections when the report was prepared primarily to comply with tax laws.
Tax Court Adopts Substantial Discount for Embedded Capital Gains But Declines Per se Rule
Tax Court adopts the taxpayer’s dollar-for-dollar discount for embedded capital gains tax liability based on 2nd Circuit precedent and its own present-value analysis but specifically declines to adopt the per se rule of the 5th and 11th Circuits.
Noncompete Is a Corporate Asset, for Income Tax Purposes
Federal district court finds that, when a dentist incorporates his practice, including a covenant not to compete, the subsequent sale generates professional goodwill that is a corporate asset and its value is dividend income to the dentist.
Reasonable Compensation Analysis Must Incorporate Applicable Legal Test
Tax Court finds CEO compensation reasonable under the independent investor test when return on equity approaches 20% but finds -15% return unacceptable and adjusts compensation to result in 10% return.
Tax Court Favors Expert With Greater Industry Experience in Valuing Telecomm Company
Tax Court finds taxpayer’s expert, a CPA/ABV with substantial experience in the telecommunications business, more persuasive in valuing a 25% interest in a private wireless company using four traditional BV approaches plus a distribution-yield analysis.
Estate of Jensen v. Commissioner
Tax Court adopts the taxpayer’s dollar-for-dollar discount for embedded capital gains tax liability based on 2nd Circuit precedent and its own present-value analysis, but specifically declines to adopt the per se rule of the 5th and 11th Circuits.
Howard v. United States (I)
Federal district court finds that when a dentist incorporates his practice, including a covenant not to compete, the subsequent sale generates professional goodwill that is a corporate asset and its value is dividend income to the dentist.
Tax Court Crafts Its Own Cost-to-Partition Approach in Valuing Fractional Interests
Tax Court rejects approaches by both IRS and taxpayer expert for valuing undivided half-interests in vacation home, ultimately concluding combined discount of 17% under weighted, partition and nonpartition scenarios.
Having Lost the War on Family LLC, IRS Loses the Battle on the Discounts
Tax Court applies step transaction doctrine to formation and funding of family LLC, and then applies taxpayer’s discounts for lack of control and marketability, in absence of IRS evidence regarding the same.
Close Call: Taxpayer Appeals FMV Standard and Discounts in Valuing FLP Restrictions
8th Circuit upholds Tax Court’s decision regarding application of IRC Sec. 2703 to FLP transfer restrictions and their limitation of marketability discounts under the fair market value standard.
Multipak Corp. v. Commissioner
Tax Court finds CEO compensation reasonable under the independent investor test when return on equity approaches 20%, but finds negative 15% return unacceptable, and adjusts compensation to result in 10% return.
Pierre v. Commissioner (II)
Tax Court applies step transaction doctrine to formation and funding of family LLC, and then applies taxpayer’s discounts for lack of control and marketability, in absence of IRS evidence regarding the same.
Ludwick v. Commissioner
Tax Court rejects approaches by both IRS and taxpayer expert for valuing undivided half-interests in vacation home, ultimately concluding combined discount of 17% under weighted, partition and non-partition scenarios.
Ringgold Telephone Co. v. Commissioner
Tax Court finds taxpayer’s expert, a CPA/ABV with substantial experience in the telecommunications business, more persuasive in valuing a 25% interest in a private wireless company using four traditional BV approaches plus a distribution-yield analysis.
Tax Court Finds Good Family Gives Rise to Good FLP Case
Tax Court finds legitimate, nontax business purpose in FLP’s active management and preservation of timber, and its protection against creditors.