Value of tiered minority ownership interests causes Tax Court battles
Discounts for lack of marketability and adjustments for minority interests are tough enough, but when the when limited partnership structures get complicated, with multiple ownership “tiers,” these adjustments can take on a life of their own. On May 27, William Frazier (Howard Frazier Barker Elliot) and John Porter (Baker Botts) will address these valuation challenges in “Valuing [...]
8th Circuit confirms Holman and IRS’s new weapon against FLPs
Remember Holman v. Commissioner (May 2008), in which the taxpayers gifted substantial holdings of Dell stock into a highly restricted family limited partnership (FLP)? The Tax Court agreed with the IRS, finding the transfer restrictions were merely tax avoidance devices and should be disregarded for valuation purposed under IRC Sec. 2703. Further, the Tax Court [...]
Implied minority discounts: why the courts won’t let it die
One of the problems with precedent-based jurisprudence is that it can be slow to understand new practices, even when new applications have gained common acceptance by experts in the field. Such is the case with the current doctrine of implied minority discounts (IMD) in statutory appraisal law. “The IMD posits that, no matter how liquid [...]
Two new studies support higher DLOM to protect taxpayer clients
Perhaps nothing in business valuation is more controversial than the discount for lack of marketability (DLOM).This one adjustment can have a sizable impact on clients’ tax obligations. So, naturally, one question frequently lingers in attorneys’ minds at the end of estate-planning engagements: Did the business appraiser select an appropriate discount? . . . We offer [...]
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