ComStock Advisors’ professionals specialize in preparing independent valuations for federal and state estate tax purposes and are experienced in working with the U.S. Internal Revenue Service and state taxing authorities in the event of an audit.
A business valuation is needed to determine the number of shares or units that can be gifted to ensure that the annual exclusion amount is not exceeded. Gifts beyond the lifetime gift tax exemption amount are taxable and gifts above the annual exclusion amount may count against the unified credit for estate and gift tax purposes. A valuation is an important tool for evaluating the tax consequences of the gift. In addition, ComStock Advisors’ valuation professionals are knowledgeable about the adequate disclosure requirements to enable the statute of limitations to start to run on gift transfers.
Prior to making transfers of a closely held business interest between family members, a valuation is recommended to make sure that the transfer is at fair market value. Otherwise, unintended gift tax consequences may result if the transfer is at a price below the fair market value.
Also, a formula may not pass the test of time due to changes in the company, the industry, or the economy as a whole. An old formula may no longer produce reasonable results. Therefore, periodic valuations may be appropriate to reestablish the value used in the buy-sell agreement or to validate the formula used in the agreement.
In some situations, regular corporations hold investments or subsidiary companies. The value of these interests is impacted by a built-in capital gains tax that would be realized upon the sale of the holding company’s assets. ComStock Advisors assists business owners and their advisors in quantifying the appropriate discounts from the underlying net asset value of the company.
Some companies issue voting and non-voting stock to their shareholders. The non-voting stock often sells at a lower price than the voting stock. ComStock Advisors researches the public markets to determine the difference, if any, between voting and non-voting shares, to determine the discount factor for the non-voting stock in a private company.
For owners of publicly traded securities, ComStock Advisors determines whether the stock would be subject to discounts if the stock is restricted. This is often the case if the block of stock represents an unusually large portion of the shares being traded, such that the block of stock is not easily marketed without having a depressing impact on the stock price.
ComStock Advisors’ professionals are experienced at analyzing the facts of each case to arrive at an independent, defensible opinion of value. We support our opinion with a well documented appraisal report. We are prepared to defend our work in audits with the U.S. Internal Revenue Service and if needed, at the appellate division or U.S. Tax Court.