Estate & Gift Tax Appraisal

Federal Appraisal, LLC provides appraisal and consulting services for gifting closely held stocks or interests in partnerships, or for IRS estate issues.

Estate & Gift tax issues have become complex over the years.  An essential part of the estate and gift tax analysis is the determination of the appropriate discount for partial interests.   The lack of control and influence on management, and the lack of marketability and illiquidity associated with a partial interest can often dramatically reduce the value, and hence the taxable basis.  When discounting for less than a controlling interest, several factors should be considered, including but not limited to:

Lack of Control and Management

  • size of interest and dispersion of voting interests
  • limits to distributions
  • restrictions on transfer of interest
  • key person, general or limited partnership interest

Lack of Marketability and Illiquidity

  • restrictions on sale
  • rights to partition
  • blockage factors
  • investor appetite for type of investment
  • cost of delay and reduced cash flow
  • indefinite or finite investment/partnership

See Business Valuation/Asset Type for more.

Posted in Accounting, Tax or Audit, Client Type