Business valuations for tax reporting compliance purposes
Intrinsic provides valuations of closely held corporations, non controlling business interests, and operating and holding companies for gift tax, estate tax, and income tax planning purposes.
To ensure we are providing our partners with highly specialized knowledge, skills, and expertise, we have architected our firm to create a team of experts dedicated exclusively to tax planning purposes. No matter how complicated your tax valuation matter, we can provide accurate analysis and data-based insights to help you meet your planning and reporting requirements.
Chris Anderson, CPA, ABV, ASA
Chris serves as a Managing Director and leader of Intrinsic’s Tax Reporting Valuation practice. He leverages over 15 years of professional experience in valuation and public accounting to counsel clients and their advisors in technical valuation issues related to tax planning.
- Managing General Partner
Our tax reporting valuation services
It is no secret that the burden for an estate’s executor can be immense even before the often-challenging valuation reporting is brought forth. With the ever-increasing regulatory scrutiny from the IRS, obtaining an estate’s fair market valuation (FMV) is oftentimes a complex process in which penalties can arise should it be handled improperly.
In simplified terms, the IRS defines all of an estate’s assets (cash and securities, real estate, insurance, trusts, annuities, business interests and other assets) as the “Gross Estate.” When you subtract deductions including mortgages, other debts, estate administration expenses, property that passes to surviving spouses and qualified charities, the “Taxable Estate” remains. The value of lifetime taxable gifts (gifted after 1977) is added to the Taxable Estate to compute the associated estate tax. A filing is required for estates with combined gross assets and prior taxable gifts exceeding $11,700,000 as of 2021.
Should an estate fall below the gross asset (and prior gift) filing threshold, it is still strongly recommended that an estate valuation be performed by a qualified professional as of the date-of-death (DOD) or an Alternative Valuation Date (six months after the DOD) to mitigate any potential disputes with the IRS, heirs, and/or family. In some circumstances estate valuation disputes can surface several years later where the IRS may claim the estate’s assets were valued lower than the executor thought, triggering penalties.
A qualified estate appraisal by Intrinsic can provide you with an accurate FMV of the estate’s assets at the DOD or the Alternative Valuation Date which will help to diminish these potential penalties and disputes.
At Intrinsic, we have extensive experience valuing both complex and simple estates for the country’s top estate attorneys, wealth managers, high-net-worth families, and accountants. We stand by our accurate, timely, and defensible valuations for any of your estate valuation needs.
Please contact us if you have any questions about estate tax valuations or to get started.
Our tax valuation process
While every engagement has unique aspects, the following process forms the foundation of most business valuations.
- Scoping conversation: We speak with you and your client to learn more about your needs and goals.
- Engagement Letter: We compile a formal engagement letter with detailed project information, including price, timeline, and the documents we’ll need to complete the valuation.
- Data request: Once you’ve accepted the engagement letter, we send out requests to individuals for certain information, like previous years’ tax returns, financial statements, organizational documents and projections.
- Data analysis: Our team analyzes the data you’ve provided, determines appropriate methodology and begins building the valuation model. We incorporate discounts for a lack of control (which is applied to non-majority shares of a business) and lack of marketability.
- Interviews with management: We interview company management to ensure we have the best information about the business.
- Business valuation: We craft a preliminary business valuation, which includes a report on the value of the business for tax purposes and detailed information about how we reached our conclusions.
- Client review: You review our findings and provide feedback to ensure the report is accurate and meets your tax planning needs.
- Revisions: Our team works closely with you to ensure we incorporate your feedback into the document and update findings as needed.
- Finalized business valuation: We deliver the finalized business valuation to you.