Fractional interest in estate tax turns on type, timing of gift
Estate of Adler v. Commissioner of Internal Revenue, T.C. Memo. 2-11-28, 2011 WL 300144 (U.S. Tax Court)(Jan. 31, 2010) A father owned a California ranch on more than 1,000 acres. In 1965, he gifted undivided one-fifth interests to his five children as tenants-in-common, reserving his own “full use and control” of the property throughout his [...]
Best way to gift property: FLPs or fractional interest?
A father owned over 1,000 acres of California ranch land, worth $6.4 million at his death. The estate applied a 48% combined discount for lack of marketability and lack of control, because thirty years before, the father had gifted equal, undivided interests to his five children as tenants-in-common, reserving “full use and control” of the [...]
New case digests added to BVLaw
Metro Tech Corp. v. TUV Rheinland of N.A., 2010 WL 4117123 (D. Puerto Rico.)(Oct. 18, 2010); and Metro Tech Corp. v. TUV Rheinland of N.A., 2010 WL 4117115 (D. Puerto Rico.)(Oct. 18, 2010) Court limits damages to breach of contract to those that can be ascertained with reasonable certainty, and qualifies first-time lost profits plaintiff’s [...]
New cases added to Business Valuation Law
These new cases and others are being added to the Business Valuation Law database this week: Wilson v. Wilson, 2010 WL 4723461 (W. Va.)(Sept. 21, 2010) West Virginia Supreme Court finds that construction management fees, conditioned on completion of a project, are analogous to attorney contingency fee contracts and subject to same rules of equitable [...]
Tax Court accepts taxpayer’s dollar-for-dollar discount for built-in capital gains tax liability (sort of. . . )
A wealthy New Yorker owned the majority (82%) of a closely held C Corp, which in turned owned 94 acres of lake front property in New Hampshire, including state-of-the-art athletic facilities, horse stables, and a summer camp for girls. When the owner died, the estate’s appraiser determined a net asset (adjusted book) value for the [...]
IRS, Tax Court judges keynote Georgetown Law/BVR tax and valuation conference
In their only joint public meeting this year, three of the most important leaders from the Internal Revenue Service will discuss the implementation, enforcement, and appeals of Service regulations at the Advanced Summit on Business Valuation: Resolving Tax & Legal Issues, presented by BVR and Georgetown School of Law. Moderated by Jay Fishman, an expert appraiser and member [...]
LLC structure withstands IRS challenge; then taxpayer wins discount battle
Pierre v. Commissioner, 2010 WL 1945779 (U.S. Tax Ct.)(May 13, 2010) BusinessValuationLaw.com readers may remember the Tax Court’s first opinion in these proceedings. In Pierre v. Comm’r, 2009 WL 2591652 (Aug. 24, 2009)(Pierre I), the taxpayer formed a single-member family limited liability company (LLC). In assessing deficiencies of over $1.13 million, the IRS argued that [...]
New resource for lawyers with estate valuation clients
The 2010 edition of BVR’s Guide to Business Valuation Issues in Estate and Gift Tax comes out next week. The Guide updates frequently-litigated issues such as tax-effecting S-Corporations, non-signing tax preparer penalties, and legal challenges from the IRS. Pre-order the Guide here
Laro: Be aware of precedent in your jurisdiction
Did you know that the taxpayer’s residence determines in what jurisdiction the Tax Court “sits” and what federal circuit law applies? These are just one of the illuminating facts presented by Judge David Laro and business appraiser Mel Abraham during their session at the San Fran Valuation Roundtable last week. The attendees, mostly business appraisers, [...]
Ludwick v. Commissioner: Tax Court devises its own weighted approach to value an undivided real property trust
A decision last Monday by Judge Halpern of the U.S. Tax Court implies a tougher stance on discounts for real property interests. The facts in the new decision, Ludwick v. Commissioner, are as follows: A California couple owned a vacation home on Hawaii’s Big Island as tenants in common. In 2005, they transferred their separate, [...]
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