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Valuation Case Alerts

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Pluris Valuation Advisors' Valuation Case Alerts are published on an irregular schedule, whenever the Tax Court or higher courts issue decisions on fair market value matters, or when there are new IRS rulings or other news of interest to our private clients and their other advisors.

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By: Espen Robak
For LISI: EXECUTIVE SUMMARY: Petitioner is denied $33.0 million tax deduction in its entirety because it left the “Donor’s cost or other adjusted basis” field blank on Form 8283. The Tax Court also, applying recent precedent, holds that gross valuation misstatement penalties may apply even where the taxpayer’s underpayment was also caused by Read More...
By: Espen Robak
Economic Benefit “Split-Dollar” Transaction Passes Crucial Test in Tax Court Estate of Morrissette Wins First Round in Court Inter-generational split-dollar transactions have become a popular way for families to purchase life insurance, and to do so in a tax efficient transaction structure that minimizes transfer taxes on the senior generation’s estate. The interests retained Read More...
By: Espen Robak
In Estate of Holliday, decided March 17,2016, the IRS won a small (dollar-wise) yet meaningful victory on the Sec. 2036 retained interest issue. The case is instructive, since the facts were not particularly bad for the taxpayer. Thus, and especially in conjunction with recent cases, it can serve as a guide to others Read More...
By: Espen Robak
New 2704(b) Regulations – Return of Family Attribution? In an otherwise slow news season this summer, there’s been one theme that has caused excitement among estate planners: the prospect of severe limitations on, or the outright elimination of, valuation discounts. The Proposal As reported in the New York Times recently,[i]  a representative of the Read More...
By: Jennifer Cossette, ASA
In Estate of Franklin Z. Adell, Deceased, Kevin R. Adell, Temporary Co-Personal Representative v. Commissioner of Internal Revenue, T.C. Memo 2014-155, released yesterday, the issues to be determined by the Court include the value of a 100 percent interest in STN.Com, Inc. (“STN”) and whether an estate tax valuation understatement penalty Read More...
By: Espen Robak, CFA
In Richmond,[i] released yesterday, the Tax Court (1) contributed anew to the controversy over how the contingent tax liability for built-in capital gains should be valued; (2) set in motion forces that may further widen the circuit-split among U.S. courts of appeal on this issue; (3) completely rejected the income approach Read More...
By: Steven D. Henry, MAI
The petitioners in this case, Dr. Ben Alli and Shaki Alli, made a charitable donation of an apartment building to Volunteers of America in September 2008.  At the time of the donation, the property was owned by BSA Corp., an S-Corporation in which Dr. Alli was the sole shareholder.  The property, Read More...
By: Espen Robak, CFA
It is ancient wisdom that “you can’t beat something with nothing.” It’s also well established that it’s best to have a backup plan when what you’ve set out to do is both novel and challenging. These rules were “flung down and danced upon”1 recently in Estate of Tanenblatt.2   This is all the Read More...
By: Espen Robak, CFA
Kite Stringing the IRS Along?Estate of Kite Deploys Private Annuities to Reduce the Estate Tax HitIn early 2001 Virginia V. Kite was 74 years old and, while not terminally ill, she was in poor health and wanted to do further estate planning. As a member of a prominent banking family in Read More...
By: Ori Bash, ASA
The fact pattern in Wimmer v. Comm’r, TC Memo 2012-157, proved that the Wimmers’ annual exclusion gifts were present interest gifts and not future interest gifts.  Thus, the gifts were qualified for the annual gift tax exclusion under Section 2503(b).  BackgroundGeorge H. Wimmer (“Decedent”) and his wife (jointly the “Wimmers”) formed Read More...
By: Espen Robak and Ori Bash
Formula clauses have become a popular estate planning tool, and for very good reasons. After all, when making gifts, the donor is faced with an unpleasant source of risk: valuation. What if the appraisal is challenged? With a big enough valuation discrepancy, significant gift taxes might be Read More...
By: Espen Robak, CFA
What a Waffle! As a waitress at the Waffle House in Grand Bay, Alabama, Tonda Lynn Dickerson had a regular customer, Edward Seward, who was known as a generous, albeit atypical, tipper. He liked to give lottery tickets. In fact, he liked it so much he would regularly drive from Alabama, which Read More...
By: Ori Bash, ASA
Stone v. Comm’r, TC Memo 2012-48 is yet another confirmation that when structured correctly, the taxpayer typically defeats the IRS in a Section 2036 case.  BackgroundJoanne Stone (“Decedent”) and her husband owned either wholly or in part approximately 30 parcels of real property in Tennessee, of which nine parcels were mostly Read More...
By: Ori Bash, ASA
In Davis, taxpayers are “whipsawed” for a $23.3 million tax deficiencyIn Allen L. Davis, et al v. Comm’r1, TC Memo 2011-286, the IRS applied a section 83 attack on illiquid stock option grants that resulted in a $23.3 million tax deficiency for the individual taxpayers. In addition, the Tax Court held Read More...
By: Ori Bash, ASA
Liljestrand v. Comm’r, TC Memo 2011-259 is another bad facts case that propelled the IRS in a Section 2036 attack, and resulted in an approximate $2.6 million federal estate tax deficiency for the taxpayer.  BackgroundDr. Paul H. Liljestrand accumulated his wealth as a general practitioner and surgeon for a medical practice that Read More...
By: Ori Bash, ASA
In Estate of Anne Y. Petter et al. v. Commissioner, No. 10-71854 (9th Cir. 2011), the Court affirmed a decision by the Tax Court[i] that allowed for the use of a “formula value” clause.  In the Petter case, the Ninth Circuit joins the Fifth and Eighth Circuits on the issue of Read More...
By: Ori Bash, ASA
In Adler v. Comm’r, TC Memo 2011-28, the IRS prevailed in a Section 2036 attack, and eliminated fractional interest discounts applied to an estate with a ranch property.BackgroundOn December 8, 1965, Axel O. Adler (Adler) transferred undivided one-fifth interests (to his five children) in his 1,100-acre Rancho Aguila property in Carmel, Read More...
By: Espen Robak, CFA
In our currently stressed economic circumstances there may be a parent or two who feels they are not quite enjoying their home as much as before, due to the presence of recently-returned offspring. Whether this was the inspiration for the United States Court of Appeals for the Second Circuit in its Read More...
By: Ori Bash, ASA
In Jensen v. Comm’r, TC Memo 2010-182, the estate prevailed on the discount for the Built-in-Gains (“BIG”) tax when determining the fair market value (“FMV”) of the estate’s interest in a company that primarily held real estate. The Jensen case, along with others, directs appraisers to calculate the BIG tax discount using a Read More...
By: Ori Bash, ASA & Stuart Solomon
In Pierre v. Comm’r, TC Memo 2010-106, the IRS prevailed on the step transaction doctrine. However, with no appraisal fire power to back it up, the Service’s win ultimately fizzled out when it came time to value the gifts made. In 2000, Suzanne J. Pierre (petitioner) received a cash gift of $10 Read More...
By: Ori Bash, ASA
In Ludwick v. Comm’r, TC Memo 2010-104, the Service struck a major blow for its favored approach to undivided interests, not only winning acceptance of its “cost to partition” approach, but winning the argument on most of the important inputs to the model, yielding a discount that’s a fraction of what Read More...
By: Espen Robak, CFA
Gary T. Hurford passed away on April 8, 1999.  He was survived by his wife Thelma and three children.  Ms. Hurford passed away on February 19, 2001.Mr. Hurford had a conservative estate plan consisting of a bypass trust (the Family Trust) and a qualified terminable interest property (QTIP) trust (the Marital Read More...
By: Espen Robak, CFA
At the time of her death, Marjorie deGreeff Litchfield owned a 43.1 percent interest in Litchfield Realty Co. (LRC) and a 22.96 percent interest in Litchfield Securities Co. (LSC), two closely held family-owned corporations.  Founded in 1921, LRC primarily held farmland and marketable securities (68 percent and 29 percent of total Read More...
By: Espen Robak, CFA
In Estate of Hilde E. Erickson, TCM 2007-207 (April 30, 2007), the IRS determined a $734,599 Federal gift tax and a $718,320 Federal estate tax deficiency of the estate of Mrs. Hilde E. Erickson.  The taxpayer petitioned the Court to decide if property of the decedent transferred to a family limited Read More...